Friday, April 6, 2012

Credit Cards Can Save You Cash in the Long Run

This post comes from Michael, editor of  CompareCards is a credit card comparison website that helps consumers contrast the best credit cards in 2012.

When you write about something as controversial as credit cards as I do day in and day out, you begin to wonder whether or not you’re on the right side of the argument.  Many Americans hate credit cards, and despise those that promote them but in my opinion, there’s little rhyme or reason to their claims.  Yes, a credit card can be a dangerous weapon when not used properly but for those with control and financial smarts, credit cards can save tens of thousands of dollars over the course of a lifetime.

Part of the journey in being a responsible credit card holder is figuring out which card is right for you.  Too many people apply for the wrong card, and then charge up a storm only to complain later that the credit card companies are out to get them.  Start off on the right foot and only consider owning one of the very best credit cards out there.  Here are a couple of picks (and the reason why you should own them) to give you a good head start.

For cardholders who carry a balance month to month, STOP!  I know it’s easier said than done but the Slate from Chase- no balance transfer fee is the first step you need to take.  Balance transfer credit cards such as this one, offer interest free payments on your current credit card debt for 15 months and do not charge a balance transfer fee.  So for example, if you had $15,000 in credit card debt and we’re able to pay off $1,000 a month, you would be debt free in 15 months without having paid a penny in fees or interest.  Had you simply paid $1,000 a month without this credit card, you would have paid more than $1,700 in interest.  Not a good idea.

Earning cash back on every purchase is another great reason to own a credit card.  Why pay 100% of the price when you only have to pay 98% or 99%?  The best card for this venture is the Blue Cash Preferred from American Express.  A few amazing benefits to highlight:

·         6% cash back on all grocery purchases

·         3% cash back on gasoline and restaurant purchases

·         1% cash back on everything else

·         $150 sign-up bonus

The one downside to owning this card is its $75 annual fee, but consider how much you’ll save each year.  I spend around $4,000 a year at the grocery store, which means I earn $240 in cash back every year (not to mention what I earn on gas, at restaurants and on everything else).  For big families, this card could easily save thousands of dollars each year.

No matter which credit card you choose, it’s crucially important that you do your homework first.  Understand all you can about the rewards structure, the interest rate, the fees and the up-front bonuses so there are no surprises.  Most importantly, only charge what you can pay in full right away so you don’t become a statistic on household credit card debt.
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