Using a credit card gets expensive when you factor in annual fees, interest rates, and any penalties you might have to pay. However, you can use your credit card for free if you're doing it right. Some free credit cards will even reward you with points that you can cash in for free gift cards or other rewards.
Here is a fool-proof formula for free credit cards.
Pick A Card With No Annual Or Monthly Fees
When a credit card has an annual or monthly fee, you pay for those fees regardless of whether you use the card or not. Some cards might waive the fee for the first year, but on the second year, you are automatically charged for it. Keep your credit card free by avoiding cards with a fee.
Capital One (NYSE: COF) offers the Quicksilver Cash Rewards Credit Card that allows you to earn 1.5% cashback on every purchase. With a $0 annual fee, it's a good credit card for those who don’t want to pay extra fees.
Pay On Time
When you make a late payment, you will have to pay a fee. Avoid having to pay that fee by always paying the minimum amount before the due date. However, to truly keep your credit card free, pay off the full balance before the due date. That way, you aren’t charged an interest rate for any pending balances.
Keep A Budget
The credit limit is the maximum amount you can use without having to pay the penalty. Depending on your credit card issuer, you might be charged a fee when you spend more than your credit limit.
Therefore, stick to a budget and limit any transactions that will cause you to exceed your credit limit. That way, you never have to pay anything extra to use your credit card.
No Cash Advances And Balance Transfers
When you make a cash advance or transfer a balance, your bank will automatically charge you a fee that is usually a percentage of the transaction. This amount can add up fast, and rarely are these fees waived. Cash advances begin to accrue interest immediately with no grace period.
Look At The Grace Period
When you make charges on your credit card, make sure you pay off the balance within a certain time limit to avoid interest payments on the balance. This grace period is the time that you have to pay off your credit card without getting charged. Without this grace period, your balance would immediately start to incur interest from the time of purchase.
By keeping careful track of your balance, paying it off in full, and sticking to a budget, you can enjoy a free credit card.
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