Credit Cards are a great source of money when you are in a financial pinch but before you use any of the suggestions below memorize the only rule you need to manage your credit cards wisely: Only Borrow What You Can Pay Back in 30 Days or Less.
It’s sad but true that many people get into trouble with their credit cards because they borrow more than they can afford to pay back quickly. So as you scan the list of ideas for borrowing money interest-free from your credit cards, remember that the interest kicks in as soon as you fail to repay the short-term loan.
And it is worth noting that if you try to use any of these ideas very often the banks and/or retailers make take notice and stop you.
Use Balance Transfer Checks Although these kinds of offers are not as common as they were just a few years ago, if your credit is in good shape and you keep your card balances low your banks may compete for your balance by offering you interest-free balance transfers. Take advantage of these offers to get some temporary relief from paying interest on the money you owe on your cards. If your balances are zero when you get a transfer offer, read the terms of service carefully (they often exclude cash advance balances). You may be able to take out a short-term loan using one of these rare rewards from your bank.
Buy Lunch or Dinner for a Group of Friends You may need some cash and yet have too little free cash in your checking account. If your friends carry cash on them then set up a lunch or dinner where you pay the bill with your credit card and your friends give you cash for their part of the meal. Remember you may have to pick up most of the gratuity (the tip paid to the server). Be sure you pay the credit card balance before your next statement is run or you may owe interest on this large meal.
Buy Something, Wait a Day, and Return it Some retailers will accept returns from credit card purchases and offer you a choice of debiting the credit card or receiving cash. The next time you’re near a customer service counter at a large store, listen to how the CS employees handle refunds. You may be able to purchase something 1 day, not use it, and take it back the next day for a cash refund. Remember to keep your receipt. And be sure you can repay the credit card balance before your grace period ends so you don’t end up paying interest on the purchase/loan.
Pay for a Friend’s Large Purchase As with buying lunch and dinner, if your friend wants to buy a new television or other gadget and has the cash on hand, you can offer to use your credit card and pocket the cash. Again, you will want to pay off the balance before interest charges kick in.
Use Your Credit Card Exclusively for Two Weeks Out of the Month Because you usually get 25-35 days’ grace period, you can often make purchases on your credit card and then pay off the balance before your interest kicks in. Use this strategy only when you actually fall behind in your cash flow due to an emergency. It is better to NOT get into the habit of using your credit card for daily purchases (food, gas, entertainment). The idea is to use the card to cover your basic needs until your next payday. To reduce the risk of becoming dependent on the card, cut back on your discretionary spending until you get paid. Don’t dine out if you can avoid it; don’t go to the movies or other entertainment (unless you bought tickets in advance); don’t use up your gas on weekend and evening activities.
Credit cards are helpful financial tools when you manage them wisely. They can provide you with extra money in an emergency and help you budget for large purchases. But do not treat credit cards as if they are a temporary increase in your income because you reduce your real income when you commit to making regular monthly payments on credit (because of the interest fees you are charged). Avoiding finance charges saves you money; borrowing money interest-free can help you get past a tough spot but you have to budget carefully so that you can keep your credit cards paid off.