How to take advantage of your Credit Card
Credit cards tend to get a bad rap, and although it is true that for certain individuals with bad spending habits a credit card is probably not a good idea, they are genuine needs for credit cards in society and some people would be worse off without them. Think about a broken down car that you need to get to work or a medical emergency that you cannot afford to pay for, then you can see how credit cards can be a life saver, but there is more value to credit cards than meets the eyes, and in this article we would be exploring how to use your credit card to make money!
What a lot of people do not know is that credit card companies such as Mastercard and Visa make most of their money from the transaction fees they charge businesses and not from the interests on the credit cards. For this reason credit card companies such as Visa and Amex want you to use your credit card as often as possible – even if you pay back your credit balance on time.
To encourage you to use your credit card often, credit card companies offer reward points and other incentives to use your card which you can take advantage of to make or save money – so long as you remember to pay back your credit card balance in full each billing cycle.
The most obvious way to “make money” using your credit card is by accumulating rewards points which you can later redeem for goods and services. There are a lot of airpoints credit cards out there today, but if you don’t tend to travel much then you would probably be better off with a credit card that allows you to use your reward points for purchases.
The trick with reward points is to use your credit card as much as possible, and remember to pay it back before the interest free period lapses which is usually around 55 days for most New Zealand credit cards (but not all).
If you are interested in a rewards credit card, you can find a list of rewards credit cards in New Zealand on our credit card rewards page.
Some rewards credit cards offer generous sign up bonus points. Pick the right card and you could accumulate a significant amount of points right from the start so it worth shopping around.
You can find a list of Sign up bonus point credit card in NZ on our Sign up bonus credit cards page.
Some credit cards offer you cash back on purchases instead of reward points. This means rather than accumulating reward points you accumulate cash which you can withdraw and use as you please. This is great if you prefer to spend your money at a local market or stores that do not accept credit cards.
For a list of Cashback credit cards in New Zealand visit our Cash back credit cards page.
Use the Bank’s Money and Save yours:
Because most credit cards allow you about 55 days interest free to pay back your balance before incurring interest you can put your money in a high interest savings account and spend the bank’s money on your credit card instead.
By using your credit card for your day to day purchases and saving your wages into your high interest savings account, you can earn interest on your salary for the interest free days and then pay it back before the interest free period lapses. If you do this for the whole year you are bound to make a few hundred bucks free. Plus, if you spend all that money on your credit card you are likely to accumulate a lot of reward points.
Note: if you plan to do this, avoid savings accounts that reduce your interest rate if you withdraw money from the savings account as you would need to withdraw money from the savings account regularly to pay off your credit card balance.
You could also set up a direct transfer from your savings account to your credit card account just before your credit card interest free period lapses i.e. if you know roughly how much you are likely to spend in each time so as to minimise the risk of you forgetting not to pay of your balance.
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Free or Discounted Airport VIP Lounge Access:
Airport VIP lounges offer comfort and luxury while you are in transit or waiting for your flight. Almost all VIP lounges offer free food and drinks – including alcohol (we all know how expensive food and drinks can be at the airport). Other common services include flight changes, printing, movies, charging station, WiFi and excellent customer service. Some VIP lounges also offer showers and even sleeping facilities.
If an airport VIP lounge sounds like something you would like to have then it might be worth looking into a credit card with free or discounted airport VIP lounge access. Please note that most credit cards would only give you a few days access for free per year, after that you would have to pay small members only fee to access the lounge.
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Personal Liability Cover:
Some credit cards offer personal liability insurance which covers you in the event of an accident that results in injury to others or property damage that you are held responsible for.
Some credit cards offer warranty extension on top of the normal manufacturer warranty. This warranty only kicks in after your manufacturer warranty expires. That is very handy especially for electronic purchases and could save you a lot if something goes wrong.
Free Purchase Protection:
Credit cards generally offer purchase protection if you use your credit card to make a purchase. If you cannot resolve the dispute with the seller then you could reach out to your credit card provider instead.
Rental Vehicle Excess Cover:
Some credit cards offer excess cover for rental vehicles. This means that if you have rental vehicle insurance and you get into an accident, the credit card provider would cover the excess fee when you make a claim.
Free Travel Insurance:
Many rewards credit cards now come with free travel insurance for you, your partner and your dependent children if you use your credit card to pay for your travel or part of it (you need to read the terms and conditions though). Imagine how much you could save as a family!
The catch here is that you need to pay for your travel with your credit card and it pays to read the terms and conditions carefully to make sure you are covered. Our suggestion is to simply call up the credit card provider and inform them about your travel plans to check if you would be covered before you set off.
Medical Emergency Expenses Cover and Repatriation:
Some credit cards also offer medical emergency cover and repatriation if you suffer from an medical emergency that is not caused by an accident while you are traveling. Once again, we encourage you to read the terms and conditions carefully and reach out to the credit card provided to get clarification on whether or not you would be covered for your trip before you set off.
By using your credit card wisely you can not only save money but also make money. But you have to disciplined and organised. We hope you found our post useful. If you liked our post please kindly share it on Facebook, Twitter, Email etc using the share buttons below or to the side.