How to Get All of the Benefits of Your Credit Cards — and None of the Costs

By Sarah Winfrey. Last updated 9 May 2014. 0 comments

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So you got that great new credit card. You know, the one that lets you earn airline miles so you can fly to see your sweetheart, or the one that earns you free stuff at your favorite store. And you're super excited to start using it, because you want to get as many benefits as you can in as little time as possible.

But you're also a little wary. You've heard about some of the downsides that credit cards can have, like high interest rates, and you don't want to get locked into a debt cycle that you can't get out of.

Fortunately, there are ways to get all the benefits out of your credit card without getting sucked into debt. With some simple planning and intentionality, you can fly for free or get the free stuff without joining the thousands of people who owe more than they can ever pay.

1. Plan Your Spending

Look at your finances, and decide two things. First, choose the expenses that you want to put on your credit card. For instance, if you have to pay your gas bill anyway, you may as well put it on the card and let it earn rewards. Similarly, it may make your life easier to put all of your groceries and/or your fuel on your card. Deciding to do this ahead of time, though, means that you are less likely to be surprised, at the end of the month, by how much you have charged.

Secondly, give yourself a ballpark amount for how much you can spend on the card each month. This doesn't have to be set in stone, but doing this means that you will be able to tell at a glance, when you check your balance, if you can use your card more or if you should leave it at home.

2. Track Your Credit Card Spending

There are a million ways to track your credit card spending. You can use Mint.com, YNAB, a simple Excel spreadsheet, or even a pen and paper. The important thing is that you do it. Every time you use your card, take 30 seconds to jot down, at the very least, how much you spent. That way, you will know how much should be on your card when you check your balance or look at your statement at the end of the month.

Tracking your spending this way also allows you to see how close you are to your limit. If you're getting too close, you can leave your card at home before you get in trouble, rather than after.

3. Check Your Balance

I've mentioned it a couple of times, but I'll say it again. Check your balance. I know people who do this every day, but once a week is usually enough unless you're a big spender. You can do this online, by setting up an account with the credit card company, though some companies have apps you can use or will let you check by text message as well.

Alternatively, if you don't think you'll remember (or bother!) to check your balance or you want to be especially careful, some companies will allow you to set up text or email alerts when your balance reaches a certain amount. If your company does this, you can usually set up as many of these as you want, so you can track your balance this way instead.

4. Set Up Payment Reminders

Most smartphones and tablets have some sort of reminder program, though you can always download a separate app if you don't like the one you have. If you don't use either of these devices, there are also websites that will send you email reminders. Simply setup a reminder several days to a week before you need to make your credit card payment.

This means that you won't have to worry about whether you will pay your bill on time. You'll just have to wait for the reminder, then log on and pay it. If you know for sure that you will always have money in your account to pay the bill, you can sometimes set up automatic payments (though many credit card companies won't do this, because they make the most money when you pay late).

5. Ask for Mercy

If you happen to make a late payment, especially if it happens by accident or because extenuating circumstances caused you to pay late, call your credit card company. Some companies will waive interest one time, but only if you ask them to.

If you pay late because of extraordinary circumstances, they are particularly likely to do this for you. For instance, one of my friends lost all of her financial documents and most of the lower floor of her home in the flooding in Colorado last September. Her life was so crazy for a couple of weeks that she missed some bills. However, when she verified what had happened to her house, every single company waived fees and/or interest, and one of them forgave her bill altogether.

What type of credit card are you interested in?
How much do you spend per month?
Do you carry a balance?

6. Spend Wisely

It goes without saying that credit cards are not "free money." Even if you know that, though, sometimes they can feel that way. It's so easy to just slide your card, sign your name, and take off, without actually thinking about whether you can pay for what you just bought.

If you find yourself struggling with this, back off from using your card for a while. You may want to keep certain payments, like utilities, on the card, but leave it at home when you leave the house. That way, you will be able to keep earning some rewards but you won't spend more than you can afford.

7. Plan Large Purchases

One of the best ways to earn rewards on a card can be to use it for large purchase. Some friends of mine paid their tuition on a card throughout college, and flew home for free nearly every semester. However, they did this knowing that they had the money to pay the bill, or that they had loan money coming in that would cover it.

If you know for sure that you can cover the expense, there's no reason not to put it on the card and earn rewards for it. However, if there's any question about being able to afford whatever you're buying, consider setting up a payment plan (still using the card!), or covering your costs another way.

8. Check Your Statement

Credit card companies are getting insanely good at catching fraud. I just got a call from mine the other day, asking if I'd used my card in Malaysia. Um...no. However, it's definitely worth it to run though the charges on the card every month, just to make sure there's nothing strange going on.

Look especially at any charge where you might have left a tip. Sometimes handwriting can be hard to read and people enter the amounts wrong, and every once in a while someone simply lies about how much you charged. If you have the receipts to verify your amounts, you can always call your company and get these charges changed.

9. Take Advantage of the Rewards!

After all that effort, be sure to take advantage of the rewards. Don't just trade in your points for stuff, however. Do some research and find where it makes the most sense to spend those points or miles.

Using credit cards can be a great way to earn rewards that you wouldn't otherwise be able to get. As long as you are practical and intentional about your credit card use, you can rack up these great offers without succumbing to massive debt.

Do you use a rewards card — responsibly — for the points or statement credits? How do you manage your spending?

Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by any card issuer.

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