Things you can do with your credit card, part 1

2 March, 2009

Everybody can tell you that credit cards are bad. They were invented to addict the customer to the bank. Once you use your debt limit, you wait for the salary to pay it back. After that you have the money only to pay your bills but… you still have your limit on the credit card, which you can spend for consumption. ‘Credit card saved my life’, you think. But really, you’ve just became a credit-card-addict. You are in vicious circle. Unless you pay all your debt, you are your bank’s prisoner.

However, there are some advantages of credit cards. In this article I’d like to acquaintance you to one of them.

Do you know how to invest the money you don’t have? Sounds impossible, doesn’t it?

But it’s possible! The only thing you need is a credit card (with the access via Internet and free transfers) and savings account. The way to do it is very simple – you just have to transfer the money from the credit card to your savings account in the beginning of clearing period. In the end of the period you transfer the money back on your credit card account, so that you don’t pay interest. Another option is to transfer the money to your checking account and open a 1-month deposit. In hardcore version you can transfer your salary every month directly to your savings account, and use credit card for everyday shopping (remember, withdrawing the cash from your credit card in ATMs is usually interest-bearing!).

The profit you make depends on the interest rate of your savings account and your card’s credit limit. For example, if you have a limit of 1500€ and your savings’ interest is 5%, you make (1500€ * 5%)/12 = 6,25€ every month. You think it’s little money? I know, but who gives you 6,25€ for free?

It is important to have a credit card account which allows you to make free of charge transfers to your savings account! Otherwise, your transaction may be unprofitable. You also have to watch when your clearing period ends, to not be late.

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