Credit cards are always faced with numerous questions, shot by consumers every now and then.
These questions surround many trust factors and the usability of credit cards. Like, how to save money on credit cards, how to use credit cards the best way, how to use multiple credit cards, and all such lookalikes!
This topic will be concentrating on one unique and interesting question, that is circulating in the market in the present days. I liked the question when I first saw it in a finance forum. I felt good realizing that consumers are becoming smarter than before, and have now started to take credit cards seriously and positively, more than ever.
The question is, how can you save money by using more than one credit card (?). Wonderful, ain’t it? The one-line answer to this can be said, that you might save money profusely with multiple credit cards if they are used the right and sensible way. Let’s start to evaluate this topic from point to point then.
One credit card is a savings account! Here’s how:
Many consumers in this country, along with other dignified financial advisors believe, that a credit card can be appraised as a savings account. This is however undoubtedly a debatable concept, that still needs a lot of refinement and brushing up. But, I won’t be entering the debate or argument right now, rather just to give you the little basics for why a credit card can function as a full-throttle savings account.
Imagine, you open up a bank account that demands monetary savings only up to a certain limit. Like, you can’t save in that account more than $2000. This is just an example, don’t get fury or anxious right about now! I know it is totally hypothetical but you have to follow me up, for the time being.
So, this account where you can save only till $2000, is already filled in by the bank but comes with a condition, that your effort should always be to keep $2K in that account forever. If you can’t, then you will have to pay a penalty! Hence, you are getting fixed limit savings to account from the bank, which the bank has already filled with its own cash.
Therefore, whenever you are using money from this pre-filled $2000 fund, that the bank has offered, you have to refill it as soon as possible, else you will be paying a penalty fee, on the amount used. Now, shifting to a savings account, you can pretty well say that you are using money from a fund that you have created. The same thing happens with a credit card, as explained above in the shape of a fixed limit savings account. Except that this fund was created by the bank itself.
But the moment you use a portion of the fund, you are liable to replenish the used amount to prevent incurring additional interest charges, unlike a traditional savings account. One way or the other, all the payments you are making to your credit card will be reusable! The money is going nowhere.
How can you save money with more than one credit card?
Based on the point discussed above, you can say that having multiple credit cards is quite equivalent to having multiple savings account. All money stored in the card is accessible to you without any charge if you can make all due payments on time. But, that doesn’t suffice well for how you can save more money with more credit cards!?
Have you heard of the balance transfer method?
This is a great money-saving tip! This is where you take out a separate new card to transfer all your existing credit card balances into it. This method is also referred to as a subpart of credit card debt consolidation, but we won’t be going deep. In the balance transfer method, try to take out a card that has a 0% APR (interest rate), and a credit limit equivalent to your total existing credit card debt.
Once you have successfully transferred your old balances to the new card, your old cards become 100% usable. Also, you have successfully waived off all interest charges. Hence, you have saved significant amounts.
Credit cards were introduced into the consumer market to promote small scale growth by helping people financially, to achieve their goals and opportunities. If everyone has to wait for money, before they can buy absolutely anything, then a nation’s economy will fall down heavily! This will significantly decrease a consumer’s buying power, and development will slow down to a huge extent. This doesn’t mean, however, that you should take out as many credit cards as you can, and incur big debt amounts.
A credit card can help you to save money if you can maintain at least the minimum monthly payments and not make excessively high amounts of transactions. Keep all aspects explained in this post, with proper clarity, and then go on with credit cards for day to day purchases. Have a happy and debt-free life.