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How I use credit cards to combat inflation

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Inflation is on the rise. The average inflation rate is currently 8.3 percent, and certain sectors of the economy are experiencing even higher price increases. The U.S. Bureau of Labor Statistics recently reported that grocery prices, for example, have gone up by 10.8 percent in the past year.

What can you do when everything is more expensive than usual? Believe it or not, choosing the right credit card could be the right move. By signing up for one of today’s best rewards cards, you’ll have the opportunity to earn valuable credit card rewards on every purchase. Plus, you can turn sign-up bonuses and discounts into inflation-busting money-savers.

Want to know more? We asked a budgeting expert how she was using credit cards to combat inflation. Here’s what we learned.

Why this money-saving expert applied 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 the first year) and the opportunity to earn 2 miles per dollar on gas stations, restaurants and eligible American Airlines purchases.

However, that wasn’t the biggest reason why Woroch applied for the card. “I was buying airfare,” she explained, “and we got a discount on the purchase by opting to open the card and pay with it at checkout.”

The airfare discount was the first money-saving benefit Woroch got from her new credit card, but not the last. The credit card welcome bonus offered enough AAdvantage miles to help Woroch cover the costs of a summer trip.

She also has the option to take advantage of budget-friendly AAdvantage travel perks like 25 percent off in-flight food and beverage purchases and a $125 American Airlines Flight Discount available to cardholders who renew their cards after spending $20,000 or more in the previous year.

Plus, she gets her first checked bag free. As Woroch points out: “Those checked bag fees add up!”

Why another card might work better for you

If you’re planning on using credit cards to cover the rising costs of inflation, choose your new credit cards wisely. “Don’t just choose any credit card,” Woroch advises. “Analyze your spending patterns 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 primary airlines. But she recommends taking a look at some of today’s best cash back cards as well.

“Right now, cash may be more useful for most consumers,” Woroch explained. “Getting a cash back card can be really helpful to offset the increased prices we are seeing at gas stations and grocery stores since you can redeem that money as a statement credit to pay for your purchases.

Another way Woroch gets the most inflation-busting out of her credit cards: She makes sure to pay off her balances regularly. “The only way earning rewards on a credit card makes sense is to pay off your card in full,” says Woroch. “If you carry even a small balance, the interest rate that kicks in after the introductory offer is multiple times higher than any rewards you’re earning.”

If you’re concerned that you might accidentally forget to make a payment — a mistake that could have a negative impact on both your budget and your credit score — consider signing up for credit card autopay. That’s how Woroch manages her credit card bills. “I set up autopay to pay off my statement balance in full and do my best to pay down big purchases immediately so the balance doesn’t grow out of control,” Woroch says.

The bottom line

With prices rising everywhere you go, it’s time to think about how to use credit to cut costs. Pick 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 every month. That way, you can get all of the benefits that come with today’s best credit cards — and put those benefits towards your inflation-busting budget. “My new credit card will make travel more affordable,” Woroch told us, right before leaving for another trip.

Written by
Nicole Dieker
Personal Finance Contributor
Nicole Dieker has been a full-time freelance writer since 2012—and a personal finance enthusiast since 2004, when she graduated from college and, looking for financial guidance, found a battered copy of Your Money or Your Life at the public library. In addition to writing for Bankrate, her work has appeared on CreditCards.com, Vox, Lifehacker, Popular Science, The Penny Hoarder, The Simple Dollar and NBC News. Dieker spent five years as writer and editor for The Billfold, a personal finance blog where people had honest conversations about money. Dieker also teaches writing, freelancing and publishing classes and works one-on-one with authors as a developmental editor and copyeditor.
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