A credit card is not the evil entity that many have pictured it to be. You can use credit cards wisely and benefit substantially from them, but you will have to start thinking before you buy!

Pay Your Bill
The first way to use your credit card more wisely is to start paying your bill, in full, every month. This allows you to benefit from the freedom of charging your purchases as well as any benefits programs offered by your credit card company, without paying the high interest fees common with modern credit cards.

Remember, you are paying at least 14 percent in interest for most credit cards. When you do not pay your bill in full, you are, in effect, taking out a high-interest loan for the purchase. Stop and think about what you bought on your card the last time you used it. Was it socks? A meal at your favourite fast food restaurant? A cup of coffee? Would you really ask your bank to give you a high interest loan for that purchase? By using your credit card and not paying the bill off, you are doing just that.

Set Limits
How many credit cards do you own? If you are struggling with reigning in your spending, limit yourself to one credit card. While you are at it, lower the credit limit slightly so that it is something you can realistically manage, should you have an emergency that forces you to use the entire limit. If you do not have a dozen cards ready for you to use, each with its own due date, penalty system and credit limit, you will have a much easier time staying on top of your debt load and not overspending. Avoid carrying it in your wallet, where you will end up using it for spur-of-the-moment purchases.

Take Advantage of Rewards
One of the main arguments for keeping a credit card available to you is the rewards programs offered by most major credit card programs. As you are choosing the card you are going to use or the one out of your wallet you are going to keep, choose one that has a good rewards program. Then, keep track of the credits you have earned, and be ready to cash them in.

Gift cards used as gifts for the holidays, free airline travel and even a credit on your bill are all possibilities with credit card rewards programs. If you are charging your purchases, but paying off those charges every month, you are earning credit cards rewards points. However, this is a wasted benefit if you do not take advantage of the points you have earned. Also, do not pay fees in order to get a great rewards program, unless it is truly a program you will not find elsewhere for free.

Other steps to take can begin with asking about multiple swipes made to your card. Often, multiple swipes are necessary because the magnetic strip on the card doesn’t read correctly, but sometimes, cards will be swiped more than once so the information can be later transferred to a fake, duplicate card. Always ask why multiple swipes are necessary.

Also, never use your credit card to make a payment on an unsecured Web site. To check to see if a Web site is secure, look for a small lock icon in the lower right corner of the site or for the page’s status bar. If the lock is not there, then the site is not secure and you should not use a credit card to make payments. Credit card numbers can easily be swiped, with a little computer know-how, from unsecured sites.

• Keep Your Cards With the Longest History
  If you have had a credit card for a long time, keep the account open. Part of your credit score is based on your credit history. If you close your longest standing accounts, you lose that history.

• Keep Credit Cards with Outstanding Terms
  If you have a credit card with a low interest rate and no annual fees, keep the account open. There is no point in getting rid of a credit card that offers you more advantages than your other cards. Get rid of your accounts with the ridiculously high interest rates and annual fees.

• Keep Accounts with Balances Open
  As soon as you close a credit card account, your available credit for the account falls to $0. If you close a credit card account when there is a balance on the card, this appears as if you have exceeded your credit limit. Wait until your balance is completely paid off before you close the account.

Commonwealth Bank offers no annual fee on their credit cards with “Student Options.” In order to receive this credit card, interested parties are required to have a Streamline Account, which is the bank’s savings account.

BankWest offers a line of credit through their low-interest BankWest Lite MasterCard for students. This credit card is offered to students who have studied at a Western Australia university for a minimum of two years. In order to qualify for this line of credit, those applying must have a BankWest Student account.

Finally, Westpac offers a Visa card for students and if the applicant is either moving frequently or working part-time, the application approval requirements are easier. If a student doesn’t fit into either of these categories, another card may be more appropriate, as this card carries a relatively high interest rate of 19.45 percent. This card, however, does not require that the applicant have an account at any particular bank.

• Keep Your Balances Low
  Financial lenders don’t like to see credit card balances that are near the maximum limit. Your card may have a high limit, but this doesn’t mean you need to use all of it. Keeping your balances low shows financial responsibility and discipline.

• Resist the Temptation to Have a Credit Card Collection
  You really only need between one and three credit cards. If you already have the cards you need, don’t apply for any more, even if you know you will qualify for another card. A large amount of unused available credit is a red flag to lenders, and it can hurt your credit score.

• Pay On-time
  Pay your monthly credit card bills on time, and you will reap the reward of a higher credit score. It is best to pay off your credit card balance every month. If you’re unable to do that, make the minimum payment. But always send it in on time.

Financial institutions love to apply fees whenever they can. That’s why you need to understand the details of your account. If you write an “insufficient funds” check, be prepared to pay dearly for it. Not only will you be paying your bank a hefty sum of money, you’ll owe the merchant a big fee, too. Bad checks tend to happen in groups of two or more, usually because you have no idea how much money is in your account. It is absolute chaos when you have several bad checks hitting your account at one time. You will be charged an overdraft fee for EACH check and EACH merchant will charge a fee. When you don’t have much money to begin with, all these fees can really hurt your finances.

Some bank accounts come with the stipulation that you keep a certain amount of money in the account. If your balance dips below this balance, you’re charged a fee. Sometimes the number of checks you use or online payments you make are limited, too, and you’ll be charged for any checks or payments over the specified limit. Make sure you know about these types of fees, because if your account is nearly depleted at the end of every month, even one extra fee could cause your account to be overdrawn.

Credit cards have fees for balances that go over the limit and late payments. Again, when your money is tight, the last thing you need is to be slapped with additional charges. Your balance will be escalating even if you don’t make any purchases with your credit card.

My suggestion for you:

Avoid extra fees and charges whenever you can. This means you’ll need to do your research to find out when you can expect extra fees. It’s hard to get out of the cycle of paying additional fees every month, so do everything you can to prevent getting caught in this trap.

The first option is opening a secured credit card. If you have no credit history, you can apply for a secured credit card, which will allow you to make deposits against the account’s credit limits. The bank from which you get the card holds onto the deposit you made at the initial opening of the card in case you don’t make payments as required.

If you already have a savings or checking account at a bank, and if you’ve been careful with the accounts, a good bet is to try to apply for a credit card through the bank itself. Talk to a representative at your bank about opening up a card. The existing relationship with the bank will help chances of your application being approved.

Students have excellent chances of getting their first credit card while enrolled in college. Students should be aware, as credit card companies have a reputation for preying on students. Students should start out with just one card, however, regardless of the number of offers received.

Finally, a credit card from a department store or gas station typically comes with easy approval, which can make getting your first card easier. These do, however, often come with a high interest rate.

Answer: This is a practice of credit card companies that many people are not aware of, and it involves partial payments of the balance on your card. When you do anything less than pay the balance in full by the due date on the bill, the credit card issuer charges you interest on the full amount of the bill. For example, imagine the balance due on your current bill is $1000. However, you have most but not all of the money to pay it off, so you send a payment of $900. You feel pretty good about this, as you’re now paying interest on only $100, right?

Unfortunately, that’s not the case- even though you paid off most of the debt, the credit company is going to calculate the interest based on the full balance due at that billing, or $1000 in our previous example. Therefore, any time you make less than a full payment, you are being charged as much interest as possible by the credit card company. This underscores the importance and good sense of keeping your credit cards paid off- then you aren’t paying any interest at all!

• Making the Minimum Payment Every Month
  The best way to handle a credit card is to pay off the entire balance every month. If you’re unable to do this, make the largest payment you can. If you pay only the minimum payment on a credit card every month, you’ll be trying to pay off this debt for more years than you want to think about.

• Impulse Buying
  It’s very easy to buy items you don’t really need with a credit card. Take care to consider every purchase you make. Even small, unplanned purchases add up quickly. Controlling your spending will prevent unpleasant surprises when your monthly bill arrives.

• Using Your Credit Card for Everyday Living Expenses
  Buying items such as gasoline, toiletries, and groceries with a credit card can lead to disastrous results. It’s a much better practice to use cash or a debit card for these expenses. It’s easy to lose track of your spending and spend more than you planned when you pay with a credit card.