Smart savings with a credit card from the banks

Wednesday March 19, 2008

Banks offer a wide variety of credit cards designed to appeal to those looking to get out of credit card debt. These cards can be excellent value for those who need to reduce an existing credit balance, but they are not so advantageous to the dedicated saver. Low annual fees and rates can be helpful in your savings, but if you are a sound financial planner, you would be better off with a premium credit card.

To begin the savings advantages of using a credit card, you can start with whichever card you currently have so long as it has a reasonable amount of interest free days. The interest on savings account with some banks is calculated daily, so the more money you keep in there for longer, the more interest will be paid to you. You can maximise this amount with a credit card by making all your purchases with a credit card, and only paying off the balance just before the interest free period expires. With very little effort, you'll be increasing your savings just because banks are paying you interest for your savings while withholding the interest on your debt.

The premium credit card will help you gain the most from using a credit card to save. While they do have higher annual fees and interest rates than budget cards, they also tend to use reward programs to encourage you to spend. Thanks to interest free days, though, as long as you are only spending within your means you will only have to pay the annual fee. Just spending the amount per month that you do right now you could benefit from an obscene amount of reward points within a short period of use. Holidays will be easier to afford, as well as many other luxuries, and you may even gain small amounts of insurance on your purchases.

For more information on premium credit cards to improve your savings, please visit the credit card pages of our supported banks.

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