By Jennifer Gibson, Indiana region president, Northwest Bank, Anthony Pellegrino, vice president, consumer direct lending manager, Northwest Bank and Chip Pfohl, consumer lending manager, Northwest Bank—
MUNCIE, IN—During these times of high inflation, consumers are constantly looking for ways to reduce expenses and find ways to maximize the money available to them. While the most important strategy is to develop a budget and stick to it, there are a number of other ways people can address the impact of inflation on their personal finances.
In some cases, these solutions might be ones you wouldn’t necessarily think of, such as credit cards. Indeed, for many people, credit cards can be an effective solution to add to their budget management toolbox. When used wisely, credit cards offer a number of unique advantages and opportunities verses paying with cash, debit cards or other forms of payment.
For example, many banks offer zero percent interest rate specials for a set introductory period when a customer opens a new credit card account. At a time when many items cost more than ever, eliminating additional costs that are incurred because of interest is a real money saver. In addition, zero percent offers typically apply when you transfer the balance from a current credit card to a new one, and some of those balance transfer offers also last 12 months or longer.
Another way credit cards can help with affordability is through rewards and loyalty programs that offer benefits like cash back or points that can be earned each time the card is used, effectively putting money back into a consumer’s pocket. As long as you are paying in full to avoid interest and buying things you would have purchased anyway, credit card rewards represent free money. Think of it this way: If you’ve been using cash or a debit card at the grocery store, you could be missing out on hundreds of dollars in credit card rewards.
There are similar examples in other categories such as travel, dining, gas and more. Start by determining the categories where you spend the most money and prioritize those. You can maximize your benefits by mixing and matching different cards.
By paying off the amount owed each month or keeping the balance due low, credit cards can also help consumers build up their credit scores, in turn helping to get good rates on major purchases such as a home or car—which is more important than ever during times of high inflation where every opportunity for savings makes a real difference. Creating good personal finance and budgeting habits, like paying your bills on time, setting up autopay or calendar reminders, and managing your credit utilization rate, can help raise your credit score.
In addition to the opportunities to save money and reduce expenses outlined above, credit cards also provide a much higher level of security and protection than other forms of payment, including debit cards – which if compromised, can be catastrophic as they are tied directly to a bank account. Credit cards are often guarded from fraudulent activity and some offer benefits like travel insurance and return protection.
Managing personal budgets and finances in today’s economy requires both a multi-faceted approach and new ways of thinking about familiar products, like credit cards. Consider these tips and strategies to help make credit cards work for you as we navigate through this time of high inflation.
Jennifer Gibson is the Indiana region president for Northwest Bank. Jennifer has more than 20 years of experience in retail banking leadership and small business lending experience at Northwest Bank.
Anthony Pellegrino is the vice president and consumer direct lending manager for Northwest Bank. Anthony oversees Northwest Bank’s virtual lending team, including the bank’s residential and consumer lending teams within mortgage and home equity loans and lines of credit, credit cards and personal loans.
Chip Pfohl is the consumer lending manager at Northwest Bank. Chip has 29 years of experience with Northwest Bank, and currently works with the products, policies, and procedures for the bank’s direct consumer loan and credit card offerings.