Credit cards are very useful, but they can be very expensive to use. Most people don't know how expensive it can be to carry around a credit card in their wallet. Each year, people who spend a lot of money on their credit cards can throw away hundreds or even thousands of dollars. Even if you don't use your credit card much, these three tips can help you save hundreds of dollars each year.
Don't pay the bare minimum.
Most of the time, your credit card company will tell you that there is a minimum payment. Even if you owe a lot of money, your minimum payment, which is sometimes only 3% of your total balance, can seem like a very small amount. But what credit card companies don't tell you is that if you have a big balance and only pay the minimum payment for the next few years, you could end up paying thousands of dollars just in interest. In fact, the $50 you spent at the record store will double over time. Make sure you always pay more than the minimum payment. Otherwise, you'll only pay interest and never get to the principal.
Move your balance to a credit card with a lower interest rate.
Most Americans get several credit card offers every month, and most of them are for cards with very attractive interest rates. For example, many credit card offers will let you move your high-interest credit card to the new card for free and give you either no interest for 6 months or a very low interest rate for a certain amount of time. If you have a high balance and pay hundreds of dollars in interest every year, it is often in your best interest to take advantage of these offers and pay no or low interest for the next six months to a year.
Instead of a credit card, use a debit card.
It's not surprising that we often use credit cards because we're used to doing so. But why should we spend so much money on something we don't need? We can easily use our debit card to pay for that meal or gas up our car without having to pay any interest. Debit cards are just as easy to use as credit cards, and most places that accept credit cards also accept debit cards. Long-term, using your debit card to avoid high interest fees can save you hundreds of dollars in interest fees each year.
