Credit cards carry a lot of power, yet some card holders might not tap into all the benefits their credit card has, especially in the current market. A new credit card can actually be a great tool to battle inflation, which has become a major problem for consumers over the past two years.
New Card Offers
Sadly, the inflation rate is rising in the United States and are now the highest they’ve been in over 40 years. In April 2022, the inflation rate reached 8.3%, according to the U.S. Bureau of Labor Statistics. In April 2019, it was only at 2.1%!
When opening a new credit card account, it might be worthwhile to consider the impacts of the growing inflation rate and how they can be offset with certain card benefits. For example, those with a credit score of 690 or higher can often achieve an introductory 0% annual percentage rate on purchases and a sign-up bonus. This can be especially helpful for people planning on making a big purchase; the bonus can be put toward the cost while the rest of the payments can be more easily spread out over time without worries of accruing interest.
On the other hand, a credit card that offers balance transfer benefits might be suitable for users who want to pay off their existing debt. Some balance transfer credit cards also offer a 0% APR for a limited period; however, there’s an additional fee for transferring high-interest debt from another issuer. Card owners should compare the balance transfer fee with the cost of long-term interest payments on their old card to see whether it will be worth it. But for some, a 3% fee on the total debt is a better deal than, say, a 15% monthly interest rate. The only catch is that you’ll have to watch out for when that 0% introductory APR ends. “If you know that the transfer is going to be six months before the interest starts kicking in, you want to have a plan to get as much of that debt paid off in that six months,” said Melissa Cox, a certified financial planner and advisor at Fetterman Investments.
Rewards On Purchases
As people start spending more in their daily lives due to inflation and increasing costs, credit card rewards and cashback can also be a place to save some money. Some banks offer cards with rewards of 2% back on all purchases as well as 3% or more on specific categories. Based on the provider and the card type, these categories can vary drastically. But by choosing one that fits your specific spending habits, you can save some serious cash. Just 5% back on a $500 grocery trip is $25, for example. Over the course of a year, that adds up to hundreds!
In addition to general purchase rewards, big credit card issuers often give their customers exclusive discounts at specific stores. If you look at your account, you’ll find that you can activate bonuses for shopping with merchants in a vast list of categories from flowers and books to flights and hotels. However, you’ll have to make sure you select these ahead of time or you won’t receive the benefits. So, keeping an eye on them and checking in periodically is a good idea, especially as prices surge.
Of course, other benefits are sometimes available for credit card owners. Some cards even offer cell phone insurance, price protection, or other added features. Log into your account or contact the card issuer to find out more about those options and see if you can save some money!