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Savvy Credit Card Tips for Consumers in Their 20’s

10 April 2013 4 Comments

canstockphoto1749692This guest post was written by Jason Bushey. Jason runs the day to day operations at Creditnet.com, an online authority on comparing credit cards.

As a 25-year-old lucky enough to write for a personal finance website, I’m privy to a lot of helpful finance tips and information I would have otherwise never considered. Now and again, I drop these helpful hints on my friends and they either look at me cross-eyed, or ask me why I’d kept that advice to myself for so long.

Well, consider the following list me no longer keeping this stuff to myself. Here are some savvy credit card tips for people like my friends and I that are in our 20’s and frankly could use all the financial advice we can get. First, let’s talk about transferring your balance…

–     0% balance transfers

What are they? This is when you transfer an existing credit card balance that you’re paying interest on and transfer it to a new card with 0 percent interest applied to balance transfers.

How can they help me? 0 percent interest credit cards can save you a small fortune if you’re paying interest on your credit card bill each month. And odds are if you’re my age, the first credit card you have (and are probably still carrying) has sky-high interest and very few rewards. It’s time to upgrade, people.

Find a credit card that offers no interest for 6-to-18 months applied to balance transfers. Apply for and receive your card, and initiate the balance transfer with your new credit card company immediately (they make it real simple) to take advantage of the full introductory period. From there, start paying down your debt interest-free and watch your balance dwindle down to nothing. That’s the idea, anyway…

Most balance transfers do require a one-time fee, often 3 percent of the total balance you’re hoping to transfer. However, that’s a worthwhile price to pay for saving each month on interest.

–   $100 cash back credit cards

What are they? These are credit cards that offer new cardholders a $100 cash back bonus when they spend a specific amount in a given period of time. It’s by no means the industry standard, but many cards offering a $100 cash back bonus require $500 in purchases within the first three months as a cardholder.

How can they help me? You like free money, right? Let’s say you’ve saved up for a big-ticket item, something that costs $500 or more. An easy way to save $100 on this item is to apply for and receive a credit card with such an offer, then use it to make the purchase you’ve been saving up for. Pay your balance back immediately and voila, you just saved $100 without spending a cent on interest.

The only catch with these cards is that they require good-to-excellent credit to get approved. So unfortunately if these credit savvy tips for your 20’s are coming a little too late, this offer may not be on the table for you. But if it is, this is an easy way to save money on your upcoming big-ticket purchase.

–     Keep your credit card balance low or non-existent

OK, we knew that: This might go without saying, but it’s always worth a reminder; keeping your credit card balance low will increase your credit score over time while saving you a ton of money on interest.

How low we talkin’? Here’s the deal – a full third of your credit score is made up of the amounts you owe relative to your total available credit. It’s especially important that you keep the amount of credit card debt you owe under 30 percent of your total available credit, but it’s ideal for that ratio to be under 10 percent and especially zero.

Despite what you may have heard or read, there’s no benefit to carrying a balance each month. Seriously – none. No balance means no interest, no debt and no worries – at least when it comes to your credit card.

Make paying down your debt a priority; you’ll have more cash to spend (or save), and your future interest rates will be lower thanks to the excellent credit score you acquired in your 20’s.

4 Comments »

  • Mike@WeOnlyDoThisOnc said:

    It's often hard to sort out the worthwhile cashback offers from the ones that will make you spend for items or services that you don't need. Thanks for the tips!

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  • Maureen said:

    Credit cards – they only reason they exist is to create money which doesn't exist in the first place, and then create real money from them….

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