Inflation is on the rise. The average inflation rate is currently 8.3% and some sectors of the economy are experiencing even greater price increases. The US Bureau of Labor Statistics recently reported that grocery store prices, for example, have risen 10.8% over the past year.
What to do when everything is more expensive than usual? Believe it or not, choosing the right credit card could be the right decision. By signing up for one of today’s top rewards cards, you’ll have the chance to earn valuable credit card rewards with every purchase. Plus, you can turn sign-up bonuses and discounts into inflation-proof money savings.
Want to know more? We asked a budgeting expert how she uses credit cards to fight inflation. Here’s what we learned.
Why this money-saving expert asked for a new airline credit card
Personal finance expert Andrea Woroch recently applied for the Citi®/AAdvantage® Platinum Select® World Elite Mastercard®, a mid-tier airline credit card with a $99 annual fee (waived in the first year) and the ability to earn 2 miles per dollar on gas stations, restaurants and qualifying American Airlines purchases.
However, that wasn’t the main reason Woroch requested the card. “I was buying plane tickets,” she explained, “and we got a discount on the purchase by choosing to open the card and pay with it at checkout.”
The airfare discount was the first economic benefit Woroch got from his new credit card, but not the last. The credit card’s welcome bonus offered enough AAdvantage miles to help Woroch cover the cost of a summer trip.
She also has the option to take advantage of cost-saving AAdvantage travel benefits, such as 25% off inflight food and beverage purchases and a $125 discount on American Airlines flights available to renewing cardholders. their card after spending $20,000 or more the previous year.
Plus, she gets her first checked bag for free. As Woroch points out: “Those checked baggage fees add up!”
How to make the most of your credit card against inflation
If you plan to use credit cards to cover the rising costs of inflation, choose your new credit cards wisely. “Don’t choose just any credit card,” advises Woroch. “Analyze your spending habits to find one that rewards you for the purchases you make the most.”
It’s also a good idea to ask yourself how you want to be rewarded. Woroch chose an American Airlines credit card because she travels frequently and uses American as one of her major airlines. But she also recommends taking a look at some of today’s best cash back cards.
“Right now, cash may be more useful for most consumers,” Woroch explained. “Getting a cashback card can be very helpful in offsetting the price hikes we’re seeing at gas stations and grocery stores because you can redeem that money as statement credit to pay for your purchases.
There’s another way to get the most out of your credit card against inflation: make sure you pay off your balances regularly. “The only way to earn rewards on a credit card is to pay off your card in full,” says Woroch. “If you keep even a small balance, the interest rate that applies after the introductory offer is many times higher than any rewards you earn.”
If you’re worried about accidentally forgetting to make a payment — a mistake that could negatively impact your budget and credit score — consider signing up for automatic credit card payment. This is how Woroch manages his credit card bills. “I’ve set up autopay to pay off my statement balance in full, and I do my best to immediately refund large purchases so the balance doesn’t get out of control,” says Woroch.
The bottom line
With prices rising everywhere you go, it’s time to think about how to use credit to cut costs. Choose a credit card that rewards the purchases you make regularly. Take advantage of bonuses and discounts.
And try to pay off your balances in full each month. This way, you can take advantage of all the benefits offered by today’s best credit cards and use those benefits in your anti-inflation budget. “My new credit card will make travel more affordable,” Woroch told us, just before leaving for another trip.