Here Are 5 Unexpected Ways to Use Your Credit Card

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  • Credit card cash back can help you invest.
  • 0% balance transfers is one of the easiest ways to score free financing. 
  • Remaining mindful of credit card balances can enhance your credit score.

Credit cards are good for more than collecting airline miles. 

Most of us are so busy making it through each day that we don't have time to get creative. And who knew it's possible to get creative with our credit cards? With a solid plan in place, it's possible to enhance our financial lives simply by using and paying off our credit cards. Here are five ways it can be accomplished.  

1. Score free financing

This idea is not new, but I wanted to share it. Two years ago, we decided to remove the old builder's grade carpeting in our house and replace it with hardwood flooring. I wanted to avoid taking the money from our savings account to complete the job, but I also wanted to avoid paying interest. 

We applied for a new credit card with a 24-month 0% promotional rate. We knew we had 24 months to pay the card off before the APR reverted back to its typical rate. We made a monthly payment while the bulk of the money we'd saved for new floors was left in an interest-bearing account.  

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2. Pay off high-interest debt

Let's say your car breaks down, and you need $3,000 in repairs. In a pinch, you put the debt on a credit card with a 17% APR. If your credit score is strong, there's a good chance you can pay that debt off using another credit card. Here's how it works:

  • Log in to each of your credit card accounts. One may be offering a low-interest (or no-interest) promotional rate. Where that information can be found varies by card, but typically it's under the "account services" tab.
  • If the company is offering a 0% balance transfer, you can move the high-interest debt to the interest-free card. Remember that you'll pay a transfer fee of around 3% of the total balance. For example, if you're transferring $3,000, a fee of $90 will be added to the balance. 
  • If you stick to the plan and pay the card off in full before the promotional period expires, you're money ahead. 

3. Invest for the future

Cash back credit cards are an easy way to rack up money for the things we need. But what if you invested the cash instead? Let's say you earn $200 cash back in one year. Rather than spend it, you invest the money in a Roth IRA with an annual return of 7%. In 20 years, the $200 will be worth $774 -- a $574 gain with no effort.

But you can do more. Adding an extra $50 per month to the account will give you roughly $25,400 in 20 years, thanks to compound interest.  

4. Build your credit score

A whopping 30% of your credit score comes down to "amount owed." Lenders want to see that you have access to lots of credit but choose to use it judiciously. Imagine that you have a credit card with a $5,000 spending limit. It's better to carry a balance of $1,000 than $4,000. Having a zero balance is better yet.

Once you've had a credit card long enough to use it and pay it off a few times, request a credit 

limit from the credit card carrier. Almost all credit card companies allow you to make a request via their websites. Say that the $5,000 spending limit is increased to $7,500. Keeping your balance low will improve your credit score even more because you suddenly have more credit available.  

Keep in mind that some credit card companies run a hard credit check before they agree to raise a spending limit. This "hard" check may ding your credit score by a few points, but your score will rebound after several on-time payments. 

5. Track spending

My husband and I use one of our credit cards to pay for everything from groceries to haircuts. We only use one card for two reasons: It's easier to keep track of, and we use the rewards points to pay for vacations. 

Besides our mortgage payments, there's very little that does not go onto that card, which ultimately makes my life easier. I don't want debt to pile up and I never want to pay interest, so I've gotten into the habit of paying the card off every Friday. Before entering my payment, I review the week's transactions to track what was spent and look for fraudulent activity. It sounds very serious but takes me approximately three minutes to accomplish.

Using a credit card to track our spending keeps me on top of where every dollar is going, a trick I never quite mastered when I only had my check register and monthly bank statement to count on. Given all the benefits offered by credit cards, the one I value most is the way it helps me track our spending. 

Like any financial instrument, the idea is to make your credit card work for you. For example, you don't have to pay interest unless you carry a balance. And, if you're feeling creative, you can find other ways to use your card. 

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