Experian reports that credit card debt dropped by nine percent for Americans in 2020, and is at an all-time low since 2017. That may come as no surprise, with the pandemic causing so many Americans to cut back on or even eliminate non-essential expenses – either by choice, or through government-mandated stay-at-home orders, and non-essential businesses shutting down. The airline industry has seen its figures plummet, with the number of travelers every day this year being a mere fraction of what they were on the same day last year. Many retail and entertainment businesses shut down for months, or are still shut down. So, consumerism took a hit, and as such, people didn’t use their credit cards much.
That might be a bit of a shame. At least for those who know how to use their credit cards responsibly, when they do use them. Credit cards can offer chances to earn and save that a regular debit card simply doesn’t. While having a credit card can create problems for those with shopping addictions, cash flow issues, or impulse control problems, it can be a great asset for those who know how to use it right. Credit cards don’t just give you a way to borrow money, but also to earn and keep more of it. Here are some helpful credit card hacks to save and earn more.
Cashback on gift cards, plus coupon codes
Most credit cards offer some cashback, even if it’s just one percent. The trick is learning how to make the most of that benefit, and a great way to do so is by purchasing gift cards to your preferred vendors on platforms where you’re getting cashback. Here’s an example: one of my credit cards offers five percent cashback this time of year on Amazon. I recently needed to book a $300 hotel stay on Hotels.com. Instead of paying directly with my card on Hotels.com, I bought a $300 Hotels.com gift card on Amazon, thereby receiving 5 percent cash back ($15 on that purchase) for shopping at Amazon. Then I used that gift card to book my stay and combined it with a promo code for Hotels.com.
Cashback on gift cards, take 2
Here’s another way credit cards and gift cards work in harmony. If you have a card that offers higher cashback at certain vendors, during certain times of the year, you may be frustrated because you just don’t need to spend that much at Costco/Nordstrom/Vons today. But, you can buy gift cards from those vendors during the high cashback period to use later, essentially buying money for cheap. If you do, for example, get five percent cash back at Costco October through December, but you know you’ll shop there all year long, load up on Costco gift cards during the high cashback period to earn money on money you’re going to spend anyways.
Know the rewards schedule
Know the rewards schedule and programs for all of your cards. Study them and familiarize yourself. You may have one card that gives you two percent back at small businesses. Another that gives you a bonus when you spend X amount at Walmart. And another that gives you one percent on everything. Know these programs, and keep them in mind when making every single purchase.
Transfer your balance
If you aren’t happy with the high-interest rate you’re paying with your credit card company, see if another will buy your debt, and charge you less for it. You don’t need to keep loyalty to a credit card company that’s charging you too much. They’re in the business of selling money, and you’re in the business of buying it. You can take your money elsewhere. Shop around and see who will give you the most competitive rate. Equifax lists some things to be aware of before making a transfer, such as how long the low rate period lasts and whether or not it also applies to new purchases or just your transferred balance.
Let your points take you further
After paying a few credit card bills, you may have a decent amount of rewards points built up. While you may be tempted to just grab the cash, take a moment to consider if the points can take you further, with a vendor you were going to patronize anyway. Sometimes, for example, 2,500 points is equal to $25 cashback. However, if you use your card’s shopping portal, you may find that 2,500 points is worth $30 or, say, $35 when used with certain vendors. Consider if you need anything from those vendors (you only save money if you really needed to buy something from those vendors) and consider having your points go further on a purchase, than as cash.
Or, invest your cashback
If you don’t need anything from the vendors in your card’s shopping portal and want to make your cashback rewards go further, just reinvest them right away into a savings account. Don’t touch them. Don’t put them in your checking account. Funnel them immediately into a savings account where they can earn money for you. One former stockbroker and financial planner breaks down how your savings should be built here. There’s another way to invest your cashback: if you’re working on paying down your credit card debt, use your cashback to pay down the balance.
Find associated hotels and airlines
If you travel often, call your credit card company and see what affiliated airlines or hotel chains they offer rewards programs through. Some major credit card companies and major hotel chains like Ramada or Marriott work together, offering members of the hotel rewards programs extra points for booking with a certain credit card.
Look into rental car insurance
When you rent a car, the rental company will offer to sell you insurance. It won’t be cheap. It’s possible that your regular car insurance already has you covered when driving a rental. But if it doesn’t, call your credit card company. Some credit card companies pay for your rental insurance, so long as you book the vehicle using that credit card.
Refer a friend
If you’re really happy with your credit card, call them and ask if they have a referral program. You may get a nice chunk of change for referring friends. Everybody appreciates some free publicity. Then you and your buddy can rack up rewards together, and combine your cashback for shared experiences like dining or travel.
Foot the dinner bill, and get paid back
If your friends don’t have credit cards or aren’t set on using theirs next time you all dine out, you can earn some cashback by putting the entire bill on your card, and then just having your friends directly pay you back for their portion using Venmo or another cash app. Then you get the points for their purchases, without actually paying for them. (Just make sure your friends do pay you back).
Buy the airline tickets, and get reimbursed
If you have a card that rewards major points for airline travel, you can earn big when you put your tickets, and those of your fellow travelers, on your card, and once again just have the other travelers pay you back directly. Doing this for pricey trips can launch you closer and closer to your own free trip, using your accumulated miles.
The grocery store gift card/cashback/gas reward triple bonus
You can triple up on earnings if you play your cards (no pun intended) right. Many grocery stores offer gas rewards, giving you a certain amount off per gallon, for every X amount spent at their store. Furthermore, some credit cards give you cash back for shopping at certain grocery stores. If you’re nearing the threshold of earning major gas rewards at a store that your credit card gives cash back for, buy gift cards to that grocery store. You’ll hit your spending minimum to earn the gas rewards, get cash back for using your credit card, and buy gift cards for something essential – groceries.
Take advantage of identity protection
Many credit card companies offer complimentary identity theft protection programs to their members. All you have to do is ask. Keep in mind that independent identity theft protectors can charge you upwards of $100 a year for the service. So take advantage of this perk, if your card company offers it. Consumer Reports says that seven to 10 percent of Americans are victims of identity theft each year, and 21 percent are repeat victims.
Look to your card for home or auto loans
Many credit card companies give discounts to loyal members for other loans. So if you are ready to, for example, buy a home or car, before going to any other lender, see what your credit card can offer you. If you’ve been a long-time member, they may give you a better rate than other lenders, cover closing costs, or offer some other financial perk.
Build great credit to get great rates
One of the best indirect ways you can save money by using credit cards is by using your credit cards correctly to build great credit, and, as a result, see low rates on future loans. Experian recommends never using more than 30 percent of your total credit limit to keep your credit in good standing. If you’re aiming for excellent credit, keep your usage to 10 percent or less of your limit.