Credit Cards Plus

Using credit cards pay for groceries has often been seen as a case when credit card spending has been out of control.  This can be the case but it is often a perfectly acceptable strategy.

It can make sense to pay for groceries by credit card due to the grace periods and the cash back facilities that many credit cards have.  However, rolling over credit card balance that has been built up by spending on groceries can be a bad idea as it indicates that the consumer is using credit card borrowing to finance every day spending, which is usually a warning sign that credit card spending is growing out of control.

One of the reasons to buy groceries on credit cards is that there is an interest free grace period of up to two months which can mean that interest can accrue on any savings that are saved rather than using to buy groceries.  This will mean that savings do not have to be touched when the wage is running out at the end of the month.

A more radical way of using interest free periods with credit cards is to use interest free balance transfers.  These are balance transfers that are charged at a zero per cent interest rate.  Many card users will build up normal spending on a credit card and will then start transferring the balance to zero per cent credit cards and start to move these balances on to other cards when the zero per cent rate runs out.  This can lead to, in effect, an interest free loan.  This needs a good level of organization.

Another way to benefit is through using cash back bonuses.  These are awarded on some cards.  Essentially they are a way of sharing with the credit card user the merchant fee that they charge to the shop for processing the transaction.  In most cases the cash back is limited to about 1% of the credit card spend on the card, although this in itself can become a considerable amount if the card is used consistently.  However there are some cards that have a higher introductory rate, which can be as much as 5%, for the first three months of using the card.  Some cards have a higher cash back rate for groceries and gas which can be double the cash back rate awarded on all other goods.