Holiday shopping overloaded your credit cards? Worried about the
finance charges you'll soon start paying? Fortunately, you can
use a bunch of different tactics to save money on credit cards.
Some suggestions follow:
Leave Home without It
If you're like most people, you spend more money if you carry a
credit card around. Some studies show that credit card holders
spend 23 percent more on average even if they don't carry a
balance on the credit cards. No investment pays an instantaneous
23 percent rate after taxes. Even business investments. Despite
what one credit card issuer says, you're really better off if
you leave home without it.
Cancel Unnecessary Credit Cards
If you don't carry credit card balances, cancel credit cards
that charge an annual maintenance fee. Lighten your wallet by
canceling all the cards you don't use, for that matter. You'll
only spend more if you use them, anyway.
Ask Your Bank to Waive Its Annual Fee
Call your bank and explain that, because of the annual fee, you
might cancel your credit card. Tell the bank you think it should
waive its annual fee. Your current credit card issuer will
probably gulp and then waive the fee. For a two-minute telephone
call, you'll be ahead by $20 or $30. (By the way, most credit
card issuers don't waive the fee on a gold card.)
Consider an Affinity Card
If you travel on business a lot, you can easily run up $10,000
or more on a credit card as you pay for airline tickets, hotels,
and rental cars. In this case, it's well worth it to pay $50 for
an affinity card. Once you have the card, charge all your
personal and business purchases on it ().
Cancel Credit Insurance If You Have Any
Credit life insurance is usually a big waste of money. You only
need credit life insurance if you know your estate will collect
and you can't get a better kind of insurance. Credit disability
insurance is usually another big waste of money. But, as with
credit life insurance, you may need this insurance if you
require disability insurance and you can't get better insurance.
Cancel Credit Card Protection Insurance If You Have It
Credit card protection insurance is another waste of money. If
some nefarious type steals your credit card and runs up huge
charges, you are probably only liable for the first $50 or so as
long as you immediately tell the credit card issuer that the
credit card was stolen.
Never Make the Minimum Payment
Pay more than the minimum payment. Paying off high-interest-rate
credit cards is one of the best investments you can make. (The
others are typically investing in a profitable business and
contributing money to a 401(k) plan in which the employer
matches a portion of the contribution.) If you make minimum
payments only, your credit card debt quickly balloons. Very
quickly balloons, I should say. Soon you are paying massive
monthly finance charges.
Get Rid of Your Gold Card
You're paying for the privilege and prestige of that gold card.
But you knew that, right? You can probably save yourself at
least $40 or $50 just by having an old, boring, regular Visa or
MasterCard.
About the author:
Seattle accountant &
author Stephen L. Nelson CPA has written more than 150
books. His bestselling book is Quicken for Dummies, which sold
more than 1,000,000 copies. His books have sold more than
4,000,000 copies in English and have been translated into more
than a dozen other languages.
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