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Although consumers are forever being cautioned on how to use their credit cards – Don’t use your credit card unless it’s an emergency! – with the number of fees and charges that we’re often hit with when using our debit cards at the ATM or making in-branch withdrawals with our savings account passbooks, many people are rightly wondering if using their credit card like a bank account isn’t a better option, one that is likely to save them money on a daily basis.

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Image: flickr.com/photos/scobleizer

Let’s look at why many people are rethinking the way they use their credit cards.

Bank fees

The fees that banks charge are not only horrendous, they’re often bordering on the insane and often have the result of driving consumers in that direction too. Take writing a check and overdrawing your bank account for example.

Say you wrote a check for $200 when making a purchase or paying for services and you only had $195 remaining in your savings account, which is admittedly something that you should have been aware of, but perhaps the bank’s monthly $5 account fee was deducted the day before.

The bank would charge you an overdraft fee for anywhere up to $35 depending on your bank, though if you used your credit card, and chances are you get interest free purchases as most card issuers now offer, you wouldn’t have to pay a cent.

Another option would be to opt for a cash advance, which is usually not advisable due to the interest charged on cash advances, but if you were only borrowing for a day or two would certainly prove to be more cost effective than being hit with an overdraft fee.

With that in mind, why wouldn’t you just pay with your credit card?

ATM fees

Some banks allow their customers to use their own ATMs free of charge in their region, charge them a small fee for using their own ATMs elsewhere and hit them where it hurts when using a competing bank’s machines. However, many banks charge for all ATM transactions, or as is now more common cap it a handful of transactions per month, after which the customer has to pay each and every time they withdraw money from their own account.

A better alternative would be to use their credit card for their daily purchases and avoid using the ATM at all. Plus, with enhanced payment facilities like Visa Swipe and similar payment facilities where customers can make small purchases without even having to enter their PIN, it’s becoming increasingly feasible to limit one’s trips to the ATM to once a week if not less.

How to use your credit card as a bank account

It’s actually incredibly simple to use your credit card as a debit card or a bank account though there are a few things that you’ll need to do before you get started, most notably familiarising yourself with the fee structure of your low interest credit cards. This is an important consideration if you are to use your credit card on a daily basis for everyday purchases, because without an understanding of what you’re bank is charging you there’s a good chance that you’re in for a nasty surprise.

If you don’t already have a credit card, visit your bank or their website to source the most suitable card they have to offer you. Once you’ve decided upon a card and you’re 100 percent sure of the fee structure, apply in person, or online if you’re an existing customer, await your card and start using it for your everyday transactions – it’s actually that simple.

 

About the Author:

A dependable provider of low interest credit cards in New Zealand, GE Finance and Insurance is a leading alternative to banks for personal finance solutions. They are part of GE Capital, one of the oldest finance companies worldwide.

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