Credit Card Tactics - Part 3: How To Maximize Your Credit Card

Credit Card Tactics - Part 3: ways to maximize credit cards without spending more or getting buried in debt.
Even if we're responsibly using our credit card, there's still a little room for us to squeeze some savings or make some money. Ways that may not be available if we were using cash.

However, they're not easy and there's limited opportunity to take advantage of them. I'm sharing them so that it can get people thinking, and perhaps share other ways to maximize credit cards without spending more or getting buried in debt.

Invest before you pay.

Time your spending right after your cut-off date.That way you have 1-month or so before you have to pay. Ready your payment immediately, take it out from your salary, income or savings. But instead of paying right away, invest it in a money market fund.

The interest will be small. But compared to a cash-basis transactions, you are practically getting a discount.

And I think this one of the very few ways to realize the time value of money in that short span (at least for credit cards). However, I myself don't do this. The money market fund is relatively risk free, but it can be time-consuming (and a hassle) to keep track of payments and due dates, as well as timing your spending just right.

If I had time, and not much on my mind, I'd definitely try it though.

Stagger your payments.

You've usually got about a month after your purchase before it becomes due on your card. But did you know that even after that you can get an additional 9-10 days before the horrendous interest charges and fees are tacked on to your account?

I didn't either! But Jill over at Frugal Honey has a great tip on staggering credit card payments.

I haven't tried it personally, since pretty much all my income is from my salary. But for entrepreneurs, freelancers, of those with a (or a bunch of) "raket" on the side, it's another way to maximize you cash flow and realize the time value of money.

Bulk buy during sales using a rebate credit card. 

If you have a card that grants rebates on grocery purchases, keep using it. When there's a sale of everyday items (tissue paper, deodorants, toothpastes - stuff you normally use and always will use everyday), bulk-buy and use your credit card.

It looks like overspending, but it's an investment in real goods. You'll always use those items, and their prices will generally keep rising. Those rare sales are a way to lock in a low price for an extended time.

For example, if you can get a year's worth of toothpaste at 50% off, that's basically a 50% realized gain. You might spend more now, but you'll free up a lot of your cashflow later to use for investments or assets (the real kind).

And since it's on sale, and your card offers a rebate, the amount you save in the long term are even higher.

The same principle can apply for gasoline and department store purchases if your credit card offers rebates on those.

Personally, this is a rare chance (everyday items that aren't near expiry rarely go on sale) and I would convert some short term investments and maybe even part of my savings to take advantage of the situation.

How about you? Do you have other ways to make the most out of your credit card? Share them here by leaving a comment below.


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4 comments:

  1. How does this money market fund works? If you have discussed this already, please be kind to send the link. Thank you. :)

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    Replies
    1. Hi KC,

      It's like any UITF of MF from a bank. You need to place an initial investment (usually 10k or 5k) and then add to it as you wish (usually atleast 1k at a time). The only difference is that it's invested in time deposits or perhaps even Special Deposit accounts (instead of bonds or equity).

      You could also try this link:
      http://www.personalfinanceapprentice.com/2013/04/knowing-more-about-unit-investment.html

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