Four Tips for Using Your Credit Card Wisely

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Looking for ways to stretch your tight budget in 2014? One of your resolutions should be to handle your credit—and specifically your credit cards--more effectively.  Here are some ideas on how to do it.

  1. Reduce your credit card debt.  Go back and look at your credit card statements from 2013 and add up all the interest you paid on all of your cards. If you have several cards, and are carrying a monthly balance on each, you could be wasting a good chunk of money every year. (Your interest payments are benefiting the bank, not you!)

    Make a resolution in 2014 to cut down those credit card balances. If you can’t control your credit card spending, put the cards away and use cash for purchases.

    Once you’ve eliminated your credit card balances, charge only what you can pay off at the end of each billing cycle.
  2. Do some credit card comparisons.  The rates of interest that you pay on different credit cards can vary by several percentage points. That can make a significant difference in the total amount of interest you’ll pay over time.

    If you’re not yet in a position to pay off all your credit card debt, at least compare the rates you’re currently paying on your various cards. Save yourself some money by concentrating most of your purchases on the cards with the lowest interest rates.

    If you’re planning on applying for a new credit card, check on the minimum and maximum interest rates on various cards before you make a decision.  Consider a zero balance transfer card—that could give you the opportunity to pay off some your credit card without paying interest.
  3. Maximize your credit card rewards.  If you have a bank credit card that’s affiliated with a particular retailer (like an Amazon card, for example), you may already earn double or triple points if you make a purchase at its stores. But did you know that many credit card companies will also give you additional points for making other purchases at certain times of year?

    The extra rewards programs often change on a quarterly basis. For example, you may earn double points in the first quarter of the year if you charge tickets at a particular movie theater chain; in the second quarter, you might earn additional points if you charge meals in certain restaurants, or buy gas from specific companies with your credit card.

    Your credit card issuer may enclose a list of these extra rewards with a billing statement, or you can call customer service to find out how you can be notified about them.
  4. Make sure that you’re actually benefiting from your rewards cards. It’s great to earn airline miles or points towards future purchases, but if you’re carrying a balance on a rewards card with a high interest rate you may be spending more in interest than you’re earning in credit card rewards.  You could end up paying more for those “free” airline points than you would if you bought a plane ticket without using any points at all.

    You may be better off financially if you use a credit card that doesn’t earn you points but that does have a lower interest rate. Put the money you save on interest towards the purchase of the airline tickets.
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Please note your financial situation is unique and our tips & advice presented here may not be appropriate for your situation. recommends that you seek different advice & opinions from your own accountant or financial adviser who understands your individual circumstances before making any important decisions or implementing any financial strategy.