If used properly credit cards can be an excellent way of saving money. Assuming you make a controlled amount of purchases a month, and pay off in full the owing amount at the end of that month, most credit card issuers will not charge you interest. You can then use the other card incentives to your advantage.
Introductory Interest Rates
Many credit cards offer introductory interest rates to attract new customers. These rates can range from 0% to 14%, last for a single month or a whole year, and apply to credit card payments, balance transfers and sometimes even cash advances.
Cashback on Purchases
Some card issuers offer cashback on purchases made, often between 1% and 5%. This is credited to your account on a monthly or annual basis, based on the amount you spend. Although the percentage doesn’t compare to that of interest rates, it does add up if you avoid paying interest on balances.
You may also be offered a period in which you do not have to pay interest on balance transfers. With several credit cards you can use this to your advantage by moving the debt to providers that offer this service. Three credit cards each offering 6 months interest free on balance transfers gives you an 18 months interest-free loan.
Sweeper Deals / Offsetting
Some highstreet banks and building societies let you “offset” your remaining balance against your current or savings account. For example, if your card balance is $100 and you have $60 in your savings account, you will only pay interest on $40 of your total remaining payable. If your savings add up to more than you owe on your card you will not pay interest.
Often card issuers will tempt you with discounts, money-off vouchers or points to collect by making purchases. Assuming you are not paying any interest on those purchases this often works out to be a good deal.