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Credit Cards with a Built-in Savings Plan

Credit cards with a built-in savings plan seem to be a double-edged sword. On one hand, you’ve got an easy and unconscious way to stash away money whenever you make a purchase. That sure beats plotting and planning your savings over and over again. On the other hand, though, your credit card b ill is going to be higher based on the savings you are stashing away with each purchase. Educating yourself about the options and limitations of credit cards with built-in savings can be very valuable.

Pros of Cards with Built-in Savings:

On the positive side, credit cards with a savings plan can help you set aside money for retirement, vacation, your mortgage, or a college fund, among others. You can save up the money without even thinking about it. Some cards offer access to a high-yield savings account. Others offer savings deposited straight into a retirement account. The rewards portion of many of these cards can also be enticing. To be safe, just read the fine print.

Cons of Cards with Built-in Savings:

You’ve surely heard the phrase, “if it sounds too good to be true, it probably is.” Beware getting in over your head on the basis of good intentions. Credit cards with built-in savings plans can be enticing, but they can also carry hidden fees and risks. Be wary of how much money comes out of your checking account and where it goes when you pay your bill. Fees for carrying balances and other behaviors can quickly diminish any perks you might have found in credit cards with a savings plan. Remember that no card is right for every person.

Once you have found a few cards with savings plans to consider, give yourself time to go over the fine details. With a little time and dedication, you should be able to determine whether a card with built-in savings is right for you.

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