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Use Credit to Save Money

One of the common claims about credit is that it costs you money to use. While this is true in many cases, in some cases credit can actually save you money instead.

For instance, say that you have saved up money to make a major purchase. You have done your research, decided what you want, and have finally went to the store to make the purchase when the sales person makes you an offer to charge the item.

Don’t be so quick to brush away the offer. In some cases, these offers may come without any interest charges if paid off in a certain amount of time.

This is one of the tricks I learned about when I researched the habits of the wealthy. Instead of using their cash reserves to make purchases, they would instead finance things at a low or nonexistent interest rate. This would allow them to keep their money in the bank, earning interest…allowing them to make a bit of money.

I actually encountered that the other day. While my initial reaction was to refuse the line of credit, it occurred to me that I could place the money I’d saved up for the purchase in savings, finance the item for no interest, and actually come out a bit ahead on the purchase.

It may not seem like much, but these little decisions add up. Now, instead of being out the amount in my savings that I’d planned to spend, I will be able to allow that money to draw interest. While I’ll have to make payments on the purchase, I won’t have to pay anything for the privilege. This not only allows me to work on my goal of improving my credit, it lets me earn a few more dollars on my money that I wouldn’t have earned otherwise.

In many cases, these little offers are designed to be quick and easy to apply for, so they take very little time to secure. Just a couple minutes to fill out an application allowed me to increase my net work just a little bit more.

There is a caveat on some of these offers. Many of them are designed to encourage you to take out a credit card that you will be encouraged to use in the future. If you do use the card for future purchases, those purchases will be subject to interest charges if the bill isn’t paid promptly. That said, many places offer discounts if you use their cards to make purchases, but if you pay the new charges promptly, you come out ahead of the finance game as well.

Pennies make dollars, and even the smallest amount in a savings account can earn you a bit in interest. If you can keep your hard-earned cash earning interest for just a bit longer, your finances will thank you.

Have you ever accepted a no-interest credit offer in order to allow your hard-earned cash to continue building interest in your savings? Please share your stories in the comments below.

5 replies on “Use Credit to Save Money”

I have a Conns credit card and have purchased a lot of items from them interest free. I would watch their ads if I needed something. I have purchased my fridge, living room furniture, washer and dryer, microwave and big screen tv interest free. Their prices are a little higher than a Walmart or other big box stores though.

I have done the same for years when it comes to reward points. My Amazon credit card gives me 3 points per dollar spent at Amazon and at least 1 point per dollar spent elsewhere (different categories of purasches are sometimes higher but I do not bother to follow) and each point can be redeemed for a cent at Amazon. I always pay my balance off in full so it is free money as I am a bank deadbeat and proud of it as I pocket the bait and avoid the interest and finance fees trap set for me every time.

I’ll have to agree to disagree with you on this point. Interest rates are so low it doesn’t make sense to do this. And many times there are fees along with interest. The credit card companies are not dummies. They do not give something for nothing. I do believe in keeping an active card for the credit score or dire emergency. But not in using the tactic you are suggesting.

If you can resist the urge to overspend and already have cash saved to pay the purchase off immediately, opening a new card for 10% off your first purchase is a viable motivation as well. It would take forever to earn the equivalent amount by leaving said cash in savings.

We use a cash back credit card to pay for nearly everything then pay off the balance each month. So we actually earn money on our charges. Yes, once a year we get actual cash not points. By charging all our groceries, fuel, clothing, etc. we earn a couple hundred dollars some years.

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