Upgrading to a bigger home or a better locality? That’s great news. But it also means a lot of added expenditure for the month. There’s shifting costs, purchase of new furniture and other household equipment, perhaps a brokerage fee and deposits to be paid for electricity, water, internet and cable connection.
When all these expenses pile up it can be quite a big hit to the monthly budget. However, if you plan smart, your credit card can be your knight in shining armor and save the day. Use it wisely, and you can have quick access to funds. Here are a few tips to maximize the benefits you can get from your card while moving homes:
What if your card could provide you the equivalent of an interest-free loan, allowing you to spread the cost of a big-ticket item, without putting too much strain on your budget?
The trick is to put all your big spends on the credit card and then get the purchase amount converted to an installment plan of up to 12 months at a 0% rate. This way, instead of bearing the entire burden of the shifting in one month or paying a whopping interest on it by carrying forward the credit every month, you would be benefiting from distributing the cost at zero interest!
Many UAE banks have tie-ups with most of the big brands for furniture, electronics and so on in the region. Be sure to check with your credit card provider whether the store you have selected is covered under their installment plan program or not.
Remember: If you apply for an installment plan, be sure to clear the debt within the interest-free period. If you still owe money when the 0% deal expires, you will start to rack up interest on the debt. The best way to make sure you meet the deadline is to set up a direct debit each month.
Already splurged for your shifting on your credit card without any installment plan offers? Don’t worry, you can simply switch the amount you owe to that credit card, to a new one and enjoy an interest-free period for up to six or 12 months.
Look for a 0% balance transfer credit card and shift all your debt. You could even earn rewards in points for all the big spending you may have made.
Remember: As above, if you clear the debt before the 0% deal expires, you will pay no interest. Also watch out for processing fees for the balance transfer – these typically range from one to three percent of the amount you switch.
Earn on your spends
Spending huge amounts of cash for the shifting is probably unavoidable. But why not benefit from it, by earning yourself some rewards? If you are a frequent traveler you can put your spends on (or transfer the balance to) a good air miles credit card. Or better still, get a cashback credit card, for a nice little earning during the house move.
Remember: Such cards are only really worth considering if you can pay off your balance in full each month. If not, the cost of the interest can often outweigh the benefit of the cash back.
Some rules to remember when spending big on your credit card:
You don’t want your debts to spiral out of control. For the card to remain your savior rather than becoming the white elephant, follow a few rules:
- Keep a check on your spending. You will eventually have to pay back every dirham you splurge.
- Try to pay off more than the monthly minimum when you get your card bill. If possible, pay the entire amount owed in your statement at the end of the 45 to 55 day interest-free grace period.
- Don’t get late on your payments. There are usually huge fees for overdrawing and late payments. Not to mention the adverse effect on your credit rating. Find out How your credit card may get overdrawn.