Many people treat credit card as one of their expenses, something which costs them money. Many people refuse to have a credit card just because they think they can not afford to have one. They think, once they have credit card, they are going to pay more. This is totally wrong. They do not understand what is credit card, what credit card can does for them. Some pay more just because of their own bad habits of using credit card.
Credit card may earn more for us if we use it wisely and chose a correct credit card for us. The most two important factors to make credit card earn more for us are, annual fee waived cards and no interest charged card.
Before we apply for a credit card, we have to make sure no annual fee will be charged. There are some credit cards which are totally free for whole life without any condition. Some are free with conditions. A normal condition such as, at least 12 purchases made for one year. Another normal condition is, at least certain purchase amount made for one year. Please make sure you may fulfill the condition before you apply for it. Besides, I will also consider the waive method used. Some credit card issuers just need a call to waive the annual fee. And some need to see your signature on black and white. You have to be very clear about this before credit card application. For me, I will only apply for a credit card which just needs a call because I am not willing to send an application form to apply for the annual fee waiver. This is just because I need to pay more if I need to send out an application compare with a telephone call.
Second factor will be, no interest charge. We have to make sure we are able to pay full before we purchase anything, before we use the credit card, such that no interest will be charged. The interest charged through credit card is the highest rate among all banking facilities. If you are using credit card to own something which you actually not affordable, then you are paying more to the credit card, you can not earn through credit card. If you are this kind of person, then you may stop reading this article. We may make credit card earn more for us only when we are able to paying full statement balance.
We are not suppose to spend more money in making payment to the credit card. For me, I prefer the payment make through internet banking which is the most convenient and cheapest payment method. If I need to go to the banking hall to do the payment, then I need to pay for the petrol, car parking and I am wasting more time to do so.
With three factors above, we are paying the minimum amount, which is maybe one telephone call to get the annual fee waiver and the internet banking charge. If the credit card is a free for whole life card, we even save the telephone call. Below are five factors which may make us earn some money.
Firstly, every month we have to make a full payment before the due date, for one amount which consists of many purchases we made. If we pay cash for our purchase, our money will leave our wallet or purse before we have the goods. But if we are using credit card, our money is still in our banking account earning the interest. If we are able to pay the credit card payment after a longer period, then we earn more. For example, if I made a purchase on one day and I need to do credit card payment after 10 days, then I earn 10 days interest just because the money is still in my banking account for 10 days. If I do credit card payment after 20 days, then sure I will be earning more compare with 10 days. So now, how to have a longer repayment period, even for more than one month?
You at least must have two credit cards with their statement date almost half month apart. Before using your credit card, just choose the credit card which just past the statement date. For example, one credit card with statement date 5th of every month and another one with 20th of every month. If today is 7th August, then I should be using the credit card with statement date of 5th. If the due date is 20 days after the statement date, then the due date to do the credit card payment will be on 25th of September. This is because the statement date for the purchase on 7th of August falls on 5th of September. How much interest you will be earning because of paying late? The interest you earn will be from 7th of August to 25th of September which is total of 50 days (more than one month). If you pay your goods in cash, you are losing the chance of earning 50 days interest because your money leaves your wallet on 7th of August. By having two credit cards with statement date half months apart, we will be having a higher average repayment period. Let say we just have one credit card with statement date of 5th of every month and today is 4th of August. We have no choice and have to use this credit card even though we know tomorrow will be the statement date. The due date for this purchase is falls on 25th of August. It means we earn 22 days interest. If we have another credit card with statement date 25th of every month, then we may use that card for the purchase and we may earn 42 days interest from this purchase (assume due date of 14th of September).
Most of the credit cards provide redemption point. We may get something we want by using redemption points we have, without paying a single cent for the goods. When I need some electrical items for my house, I always look for it from the redemption list. But if you refuse to use credit card, you have to pay for everything you need.
Many card issuers provides 0% interest installment plan for cardholders to buy expensive items like furniture. This make cardholders more easier to own something expensive (of course you have to make sure you are able to pay the installment full every month). The plan helps you even earn more interest (using the same concept mentioned above) because of the long period of installment plan (from 6 months to 2 years). The most important issue here is, the plan must be interest free. Longer the plan, the more you will be earning.
One last chance to earn more will be the cash rebate or cash back. Some credit cards provide cash rebate plan. The cash rebate rate is about 0.4% to 1% of the statement balance. The rebate is reducing the credit card balance. Some cards are giving one flat rebate rate and some are depends on your statement balance.
All whatever mentioned above is true in Malaysia. Some may not be true for your country. Please do your verification before any credit card application. Please use credit card wisely to make it earn money for us.