How to fight inflation with credit card perks

As prices on goods and services continue to rise because of inflation, scaling back expenses is not the only way to free up cash to cover essentials.

Credit cards can feature valuable perks for new applicants, whether your goal is to pay off debt or save on costs. Even if you already have a card, you may be sitting on specific offers, rewards or benefits that could make a difference.

Here are some ways to maximise value from a credit card.

Introductory offers

If you have good credit and a big expense coming up, consider financing it with a credit card that offers a zero per cent introductory annual percentage rate (APR) on purchases and a sign-up bonus.

As long as you pay off the balance in full, you will save on interest charges and potentially recoup some of the cost of the purchase with that bonus.

If you have good credit but want to pay off existing debt, a balance transfer credit card may lower costs. It allows you to transfer high-interest debt from another issuer and pay it off at a lower interest rate — ideally at a zero per cent APR for a period of time.

“There is going to be a [balance transfer] fee, so you have to shop around a lot of times,” says Melissa Cox, a certified financial planner and adviser at Fetterman Investments, a Dallas-based financial planning company.

If the balance transfer makes sense, make a plan for it.

“If you know that the transfer is going to be six months before the interest starts kicking in, you want to have a plan to get as much of that debt paid off in that six months,” Ms Cox says.

Buy now, pay later options

Some major issuers have built-in “buy now, pay later” options on their credit cards that let you pay off eligible purchases in instalments for a fixed fee or interest rate.

The predictability of these types of payments can make it easier to budget for them, and such plans could save you money if their fee or interest rate is cheaper than your card’s normal APR.

The plans don’t require a credit check, and you can generally still earn rewards on purchases if the card offers them.

Rewards on purchases

A credit card that offers a rewards rate of 2 per cent back on all purchases — or 3 per cent or more back in specific categories — can help to lessen the pain of rising prices.

For instance, let us say you spend $500 a month at the supermarket. A credit card that earns 5 per cent back on groceries could net you $25 back in rewards each billing cycle. Over the course of a year, that adds up.

If your current credit card falls short on rewards for frequent spending categories such as fuel, dining out or groceries, consider one that better aligns with your spending.

Merchant-specific discounts

Some major credit card issuers offer discounts or rebates when you use a credit card to shop with specific merchants in categories such as everyday purchases, gifts and travel.

These one-time offers may be found in your account or email, and you normally have to “activate” them or add them to your card.

You will snag more value if the eligible credit card also earns rewards on the purchase.

Associated Press