Credit cards can be used for far more than an additional line of credit, but if this is the only way you’ve ever thought of using them, you’re not alone. To help increase your financial know-how, and maybe even fix your credit score, we’ve listed out all the ways credit cards can help you beyond just being financial safety nets. Become a wizard with these little-known credit card hacks.
1. Pay Down Debt Faster
If you’re already swamped with credit card debt, taking on another line of credit may seem counterintuitive to fixing your credit. However, it’s really not if the purpose is to transfer existing debt and consolidate your monthly payments. Choose a card with a better interest rate and more of your monthly payments will be put toward the principal, hence shortening the amount of time it would take pay everything off. Doing this will also improve your credit score. Even if you make your payments on time, too much debt can hurt you.
2. Credit Repair
A lot of people would rather own than rent, but the one major thing keeping them from purchasing their own property is bad credit. Either they can’t get approved for a loan or the interest rate pushes the monthly payments up too high. Of course, many people are also victims of credit errors and have to go into the process of credit disputes, which can take time and money.
To expedite the process, a faster way to repair your credit would be to take out a line of credit. Maintain on-time monthly payments, and your payment history will go up a bump. If your credit is too low for a standard credit card, get a secured credit card at first. Use it for your everyday purchases, pay it off each month, and in about half a year you should qualify for an unsecured card.
3. Pay for Travel
Choose a credit card with a great points system, and all of your normal, everyday purchases can help pay for your next hotel, rental, or flight. Each card is different, so be sure to verify which purchases earn you the most points. Just be sure you pay the card off each month so you don’t accumulate debt!
4. Roadside Assistance
Some credit cards offer roadside assistance to any car the cardholder is a driver or passenger in (just as long as it’s not a company car). Whether your car needs a quick jump start, tire change, or short-distance tow, you can get roadside assistance free of charge. Next time you’re on the side of the road, call your credit card customer assistance number (better yet, put their roadside assistance department in your contacts). The perks are not as great as having a AAA membership, but for free, you can’t beat the price.
5. Save Money When Renting
Car rental agencies are able to cushion their bank accounts by selling insurance to renters. Yes, insurance is always a smart thing to have, but it’s not smart when it’s a redundant purchase. Many credit cards offer free, comprehensive rental coverage to their card members. So the next time you need to rent a car for a long getaway, you could save yourself as much as $40 a day by declining an agency’s optional coverage plans.
6. Purchase Protection/Warranty Coverage
If you purchase an item and it breaks through no fault of your own, your credit card likely has a third-party claims program that you can go through instead of the original retailer (who too often fight returns tooth and nail). Your credit card company will then either refund you the full amount for the repair or reimbursement. Of course, verify any limitations your card has before your next purchase, but for many cardholders warranty coverage is a waste of money.
7. Stop Paying Top $$$ for Currency Conversion
If you’re a frequent traveler, your credit card can save you money on currency conversions. Many credit card companies only charge 5%, but others waive the fees altogether. Stop making visits to foreign banks or travel kiosks that overcharge you. Use your credit card to save time and money. For many people, this perk is the sole reason they take out certain credit cards in the first place.
Ready for Next Steps?
Talk to one of our credit specialists to learn how you can take back your financial freedom. Contact us at Ovation Credit to get your free consultation.