Credit Cards: How To Save As You Spend

The concept of saving as you spend is a rather vexed one

.

For one thing, it encompasses a few different definitions of the word 'save' but almost all these are applicable to a spending situation, depending on the specific credit card that one chooses, as will be discussed in what follows.

So,to apply the concept to individuals - for example in a situation where you happen to compare credit cards - the first question to ask is, what form of saving is most important to you?

If you have high-interest credit card balances elsewhere 'saving' could simply mean not paying that extortionate rate of interest to the bank per month.

This is the case with travel credit cards. Saving as you spend could just mean using use abroad credit cards to avoid paying a foreign transaction fee on purchases.

This can also be done with a 0% balance transfer offer meaning that a high-interest balance becomes a no-interest balance.

In this case, it is important to check the credit card's terms and conditions to find out whether spending on the particular product will be possible. This isn't always the case as a result of allocation of payments clauses.

In this case, you aren't saving over and above your spending power. That is, you're not truly saving money in a sneaky way - just avoiding extra charges.

This is also true of 0% purchase credit cards. They're the ideal way to 'save' if you need to borrow money to fund spending.

Again, though, the discount is not on the spending itself but instead merely on the method of payment. Nevertheless these are both important uses for this type of card since they are saving money as opposed to using a more expensive method of borrowing.

As the use of merely in the preceding sentence may have alerted you, there are indeed ways to save in the real sense that using the card at all for spending can truly save users money and, indeed, often accrue them more in rewards or cash.

This is the case with various reward cards including cashback cards and points cards that are associated with particular retailers.

In the case of the former - that is, cards that offer a degree of cashback as you spend, the rewards can often be fairly minimal unless you're willing to move almost all of your everyday spending onto the card.

That is, as the reward is worked out as a percentage amount, the more you can spend the better.

This is not always the case with more complex rewards cards which allow the users to accrue and use points from various schemes. In this case the credit card provider is trying not to get you to spend in general but to spend in a directional way, in certain places or at certain times, in order to save.

Since some of these rewards are also offered by companies they can have a high cash value. Discounts at attractions often fall into this category, for example.

by: Julia Cook

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