How to Use Credit Cards to Your Advantage

Curtis G Martin

By Curtis G Martin

When you need to buy something significant, maybe some appliance or yard supplies for a property you're fixing. If you were planning to use your credit card, it would be best if you used one with a low-interest rate. If you need to roll over a balance, your goal should be to pay more of the monthly payment towards the balance. 

“The average annual percentage rate (APR) for credit cards is 16 percent, and the average low-rate card is about 13 percent. Over time that difference alone could save you thousands of dollars.”

Credit cards are more than likely to be used for quick funding. Another good idea when using plastic is to use a card with zero percent interest rates. Usually, those are giving for a predetermined period.

The choice between using a credit card to bankroll a big purchase comes with a caution. If you qualify for a low-interest credit card, you apparently have a high credit score. Of course, you should want to keep it like that. A massive purchase can raise your debt-to-income ratio, which will hurt your score. And to get the best interest rates, you might have to apply for a new card, which also put an inquiry on your credit.

Then there's the long-term impression on your finances. Are you convinced you'll be capable of paying the purchase off before the zero interest time is up? Will that become a bad practice for you always to finance large purchases rather than saving for them, or is this just a one-time approach? Be realistic with yourself: Is this purchase required to be made now, or could it wait until you save up for it? 

It's also necessary to examine at how precisely you'll place the purchase on the 0 APR card. Most zero percent interest is for balance transfers, not for new loans. So please put that purchase on a current credit card and transfer the balance later onto a lower-interest card.

Using a 0% credit card to fund a significant investment isn't a disastrous idea. In most circumstances, it's the most desirable option. Do your research before you fall in and be sure the expenses and risk of going farther into debt don't exceed the advantages.

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