Get Paid: Managing Your Credit to Receive the Greatest Return
While you are exploring how much you might have to pay for your credit card, it is also important to shop for ways in which your credit card pays you. Credit card companies, of course, charge fees and interest for the use of your credit line. But they also offer inducements and programs designed to attract your business. Some of these programs are more valuable than others, and some will fit your lifestyle and spending habit better than others. So, take the time to research these “payback” programs; doing so will effectively reduce the amount of money you pay for use of your credit line.
Ideally, you will look for cards that pay you back in the form of points, or cash-back programs. For example, some cards offer points that can be accumulated and used to purchase items from a specific catalog, a retail outlet or travel vendor. Still others simply refund a given portion of your purchase, in the form of cash. These types of cards are ideal for making everyday purchases that need to be made (food, clothing, etc), as they stretch the value of your dollar. However, it is important to remember that increased value is recognized only to the extent in which you pay off the balance of your card each month. The more you carry over from one month to the next, the more you will pay in interest, and the less value you will receive from the points, or cash-back offerings.
All of the standard caveats about good credit card management apply – don’t overspend, pay off as much of your balance as possible each month, etc – but these payback programs can help stretch your dollars and reduce the overall cost of your credit line.