In 2024, credit cards remain one of the most powerful tools in your financial toolkit, but many people are still missing out on hidden tricks that could save them hundreds—if not thousands—of dollars each year. The secret? It’s not just about earning points and cashback; it’s about how you use the card and leverage certain benefits.
This article will reveal a simple credit card trick that can save you up to $1,000 a year. Whether you’re looking to reduce fees, earn more rewards, or avoid interest charges, this tip will help you get the most from your credit card.
- How Credit Cards Can Cost You Big
Most people know that credit cards come with interest rates, fees, and other charges that can quickly add up if not managed properly. But did you know there are hidden costs that you might be paying without even realizing it? Here’s a look at the common ways people lose money with credit cards:
- Interest charges: If you carry a balance from month to month, you’re probably paying an average interest rate of 20% in 2024. For a $5,000 balance, that means $1,000 a year in interest alone.
- Annual fees: Some premium credit cards charge annual fees of $95 to $550, and if you’re not maximizing the card’s benefits, these fees could be draining your finances.
- Foreign transaction fees: Traveling abroad can become more expensive when your card charges a 3% fee on every international purchase.
But what if I told you that one simple trick could help you avoid many of these pitfalls, and save you $1,000 or more each year? Let’s dive into the strategy that savvy cardholders use to get ahead.
- The Trick: Pay Your Balance Multiple Times a Month
Here’s the game-changing trick: instead of paying your credit card bill once at the end of the month, make multiple payments throughout the month. This strategy is called “credit card balance cycling,” and it comes with numerous benefits that could save you a substantial amount of money.
Here’s how it works and why it’s so effective:
- 1. Reduce Your Credit Utilization Ratio
Your credit utilization ratio is the amount of credit you’re using compared to your total available credit. This ratio accounts for 30% of your credit score. If you max out your card and pay it off at the end of the month, your utilization ratio may be high, even if you never miss a payment. By making payments multiple times a month, you can lower the balance that’s reported to the credit bureaus, reducing your utilization and improving your credit score.
How This Saves You Money:
- A better credit score means better interest rates when applying for loans or mortgages.
- Some lenders may lower your card’s interest rate if your credit score improves, reducing your interest charges.
- 2. Avoid Interest Charges Altogether
If you only make the minimum payment or pay off your balance once a month, you might still be accruing interest. By making payments throughout the month, you can avoid interest charges altogether by keeping your average daily balance lower.
Example: If you have a balance of $3,000 and an interest rate of 20%, you could be charged nearly $600 a year in interest. By paying off your balance weekly, you reduce the amount of interest that accumulates, potentially cutting these charges in half.
- How to Implement the Trick: Step-by-Step
Implementing this credit card trick is simple. Here’s a step-by-step guide to start saving money:
- Track Your Spending: Review your credit card transactions weekly to keep an eye on your balance. You can do this easily with your card’s app or website.
- Set Up Weekly Payments: Instead of waiting for your monthly statement, pay off a portion of your balance each week. For example, if you usually pay $1,000 at the end of the month, break that into four $250 payments.
- Automate Payments: To make things easier, set up automatic payments through your bank or card issuer. You can schedule multiple payments to go out at regular intervals.
- Monitor Your Utilization: Check your credit score and utilization regularly to see the impact of this strategy. Most card issuers provide free credit score tracking tools.
- Watch Out for Fees: Some credit cards may charge fees for multiple payments, although this is rare. Be sure to check your card’s terms and conditions to avoid any unnecessary charges.
- Other Tips to Maximize Savings
While balance cycling can save you money, combining it with other strategies can amplify your savings and rewards.
- 1. Use 0% APR Offers
Many credit cards offer 0% APR on purchases and balance transfers for a limited time, usually 12 to 18 months. By combining balance cycling with these offers, you can avoid interest charges entirely for over a year, which could save you hundreds of dollars.
- 2. Maximize Cashback Categories
Some credit cards offer rotating cashback categories, like 5% back on groceries or gas. By using these cards in combination with balance cycling, you can maximize your cashback while also avoiding high interest charges.
- 3. Take Advantage of Signup Bonuses
Credit cards often offer lucrative signup bonuses—such as earning $500 after spending $3,000 in the first three months. By making payments multiple times a month, you can easily meet these spending requirements without carrying a large balance.
- The Bottom Line
Ignoring this credit card trick could be costing you up to $1,000 a year in unnecessary interest and lost rewards. By simply making multiple payments throughout the month, you can reduce your credit utilization, avoid interest charges, and improve your credit score.
This strategy is easy to implement and can lead to significant savings over time. Whether you’re looking to boost your credit score, save on interest, or earn more rewards, balance cycling is a game-changing hack that can put more money back in your pocket. Take control of your credit card usage today, and start saving big by applying this simple but powerful trick!