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Global economy and finance are based on the credit system. From governments to corporations to small businesses to individuals, everybody is one way or the other is tied to credit systems. It is obvious how the economy works in the US. Banks heavily rely on giving out loans and profiting from fees and interests. Using credit cards is the norm. Taking out credits for businesses and using credit cards for personal expenses can actually be a good thing if done right. Simple examples being, businesses will have the capital to achieve their business plans and individuals can benefit from credit card usage rebates.
Most of the credit cards provide rebates/rewards for using their services. It can be used to individuals advantage as long as the balance is paid on time within monthly periods. Of course, credit cards and banks offer these because of the competition but that is not how they make a profit. It is at their interest that customers fail to pay so they can charge interests and fees. It is easy to fall into a trap of late payments and the never-ending cycle of interest payments with these loans. That is what banks who offer these services rely on.
These days it is important to be responsible with personal finances more than ever. Because of Covid-19, stay-at-home regulations, layoffs, and economic stall these days hundreds of millions if not billions are affected with a certainty of their income. In this global economy, everybody wants a piece of our income. Since our incomes are not certain anymore, let’s explore actions we can take on the expense side of things.
Nothing wrong with using credit cards, as some offer rebates/rewards for usage. In fact, it is wise to do use as long as they are paid on time and a monthly basis to avoid interest. However, some of us fall into the trap of overspending and ending up paying interest on these loans. One of the ways we can avoid paid interest is by taking advantage of zero-interest balance transfer offers.
There are many credit cards like American Express, City, Bank of America, Capital One, Discover, etc that offer zero-interest balance transfers and credit card usage for periods of a year to a year and a half. Simply googling and going through offer details can provide a clear path to take. If you have some credit balance that you are paying interest on a monthly basis, you should consider this to save on paying these interests. Most of these offers come with a one-time balance transfer fee which range between 3% to 5%, but they offer zero interest for a year to a year and a half. This action is more of a delay in paying off the loan but saves a lot on monthly interest. Some, like Capital One, even offer rewards when a certain amount is spent, which may cover the initial balance transfer fee.
These offers and their terms change from time to time, so make sure you read the details before taking any of these offers. Not taking advantage of these offers while you have outstanding credit balance you can’t pay off in a short term will cause you to plunge more into debt.
Another option to take advantage of the credit card offers is to find the ones that offer rewards when a certain amount is spent. As we all have monthly expenses, using these credit cards for our expenses and getting the rewards they offer can offset some of our expenses. One of the websites to keep track of good deals is slickdeals.net. The website is a good platform to find good deals on various things, not just credit card deals.
Moreover, going through monthly expenses and charges on the credit/debit cards can also be a big savor. In this digital age, where some of our payments are only digital and we don’t receive physical bills, it is important to check all the transactions happening in our bank or credit card accounts. Occasionally, you may find some charges for services that you are not using anymore. I have recently found out I have been paying for an online service for about nine months that I have not been using. Simply calling them and discussing the situation helped with canceling the service and receiving a refund for the six months of payments.
One should also consider renegotiating mortgage and rent payments. Since some banks are getting bailouts they may be willing to forgive or delay portions of mortgage payments, and some landlord forgives, delay or rearrange rent payments. It doesn’t hurt to try to renegotiate.
Some services we may have been using might be useful to lower the plans. Like cellphone plays, as some of us stay at home and mainly use wifi should consider changing cellphone plans to lower tiers. Some internet providers also would be more lenient to offer discounts on services if we simply ask.
There are many options we can take to lower the expenses. These days we can’t afford being negligent of them, and actively reevaluating and renegotiating expenses we incur may help us manage our individual expenses better and keep us financially healthy.