3 Money-Saving Credit Card Tips

You can unlock savings and cut costs by choosing cards that offer the right benefits

Person's hand and credit card Photo: Georgii Boronin/Getty Images

Inflation means not only higher prices, but higher interest rates on everything from your mortgage to your auto loan to your credit card.

That makes it harder than ever for consumers to stick to their budgets and save money.

So here’s a savings strategy you might have overlooked: review your credit card usage, which may be costing you more than you realize. 

These three tips can help.

Shrink the Interest You Pay

As recent data from LendingTree show, the average annual percentage rate (APR) on new credit card offers is 20.82 percent, up from 19.47 percent a year ago. 

To avoid paying more than you have to, start with a simple strategy: ask your card issuer to lower your interest rate. Another Lending Tree survey found that 70 percent of requests for lower rates were granted. 

More on Saving Money

For those who carry a balance on credit cards from one billing cycle to the next, you can also consider reducing the amount of interest you pay by using two different credit cards, says Patrick Whalen, a certified financial planner in Los Angeles.

Use the card with the highest interest charge for purchases you know you can pay off by the end of the billing cycle. Then use the card with the lowest interest for purchases you may have to carry over to the next month, says Whalen. 

You should also try to reduce that balance as quickly as possible, perhaps by making mid-billing-cycle payments to minimize the interest charges or forgo using it until the balance is paid off.

Another strategy is to move your debt to a zero balance transfer card, says Ted Rossman, senior industry analyst at Bankrate.com. With this move, you can transfer your balance to a card that lets you pay zero interest for an extended period, sometimes as long as 21 months. That gives you time to pay down your debt. 

But you’ll need a good or excellent credit score—about 700 or higher—to qualify for an attractive balance transfer deal. And you’ll also need to be sure you can pay off your balance by the end of that period. Otherwise, you’ll end up incurring more interest.

Ask for Lower Fees

If you’re paying an annual fee on your card, call your issuer and ask for a waiver or a lower fee. Survey data show that these requests had a 90 percent success rate

Another option is to ask your issuer if your account could be moved to another card it offers, perhaps with fewer benefits but without a fee. That change might not count as a new account, so would have less impact on your credit score, says Matt Schulz, chief credit analyst at LendingTree. But be sure to ask first.

Similarly, you should call your issuer if you get slammed by a late payment fee. If you have a history of on-time payments, your bank is likely to waive the late fee if you ask. 

And to avoid chronic late fees, set up alerts that your payment is coming due. Or, better yet, set up autopayments from your bank account.

Maximize Your Rewards

Many credit cards offer cash back rewards, with some giving you 1.5 to 2 percent back on all your purchases, while others vary the amounts by category.

To make the most of these rewards, review your budget and spending patterns, and use the cards that will give you the most cash back when making your purchases.

For example, if your food bills are soaring, you might opt for cards that offer higher cash rewards on groceries–perhaps 5 or 6 percent back, says Rossman. 

If you don’t already have a generous cash back card, check websites like CreditCards.com, WalletHub, or NerdWallet, which let you compare rewards cards.

(Bear in mind, rewards cards are best suited for those who can pay off their balance in full.)

And don’t overlook the credit card deals you may be offered. Many credit card issuers offer special deals to cardholders on everything from restaurant meals to travel to concert tickets. Go to your card’s website to find these offers.