So, I hear you cry, how do we go about becoming empowered credit card users? Well, the answer is actually a lot simpler than you may first think. You pick a credit card that rewards you for using it instead of penalising you for using it. What I mean by this is that you should find a credit card that offers incentives. Something like the Avios Credit Card that awards air miles or the American Express Card that offers cash back or the Shell Petroleum card that offers fuel points.

Before you pick your card you need to create a plan for maximising the gains you can take out of the credit card without incurring any penalties like interest on the balance or late payment charges. The best way to do this is to find a card that suits your personality that you can easily integrate your daily habits and purchases.

Top Tip: Remember to set up a direct debit from your current account to pay off the balance of your card in full every month. This will stop you incurring any interest payments.

If you are a regular traveller then a card that would fit into your lifestyle would be the Lloyds TSB Avios Duo Card. This card allows for you to collect
“avios points”, formally known as Airmiles that can be used on a variety of flights, holidays, days out and even electronic gifts and cases of wine. This card also lets you swap points from other schemes, like Tesco Club card points, into Avios points. Therefore, you can effectively use your year of grocery shopping to buy you a ticket to an exotic destination of your choice. Not bad, eh?

If you are not much of a traveller and prefer to just get some cold hard cash back at the end of the year then opting for a card such as the Santander Cash Back Credit card will pay you back 3% of your balance. Strangely, due to the worldwide recession interest rates from regular current accounts do not reach 3%. Therefore, if you are a savvy, empowered credit card user you could earn back a couple of hundred pounds over a year for just using your credit card to pay for your fuel and groceries every month, which is more than a standard current account would offer. Again, to benefit from this scheme you need to pay off the full amount of the card every month or the interest will cancel out the gains you make.

If you like a simpler way of benefitting from a credit card, it would be best to look into some stores that you frequently shop in. For example, if you regularly buy books on Amazon you can get a discount by using the Amazon credit card to make your purchases. Or if you shop in Tesco on a regular basis then you can collect additional club card points when you use a Tesco club card.

There are many great options out there if you a looking into becoming an empowered credit card user. However, it is important to remember that the most important actions you take to become an empowered user are organisation and research. Make sure you sort out your repayments and know the rules of each card inside out. After you have this knowledge you can effectively game the system to only get benefits from your card.

Consider Interest Rates and Fees

Credit card rewards are fine and we’ll get to that in a moment, however the most fundamental thing to consider when picking a credit card is the interest rate and the fees attached to the card. This is a balancing act and the best credit card for you will depend largely on which kind of spender you are.

For example, if you are the kind who likes to run a balance, then your prime concern is what the interest rate will be. You need to pay close attention as there are often three separate rates:

Purchases – This is the rate for most items that you will put on the card. Be sure to check if there are teaser rates (i.e. a special deal that lasts for six months or a year) or if the card is a variable rate card. Either of these means that your rates will go up over time even if they are pretty low right now.

Cash Advances —If you get cash instead of signing with your credit card, the money will usually cost you significantly more in interest than for a standard purchase. Worse, there is often no grace period (i.e. with purchases, you usually have around 25-30 days to pay the balance before you begin to pay interest. If there is no grace period, you’ll pay interest immediately).

Balance Transfer—Finally, when you get your card, there will often be an option to transfer balances to the card which you have on other credit cards. This can be a very attractive deal for many people, however you need to be careful as the balance transfer rate often includes a teaser rate which goes up after six months or a year (i.e. you may see “0% balance transfer” and then in the fine print it says “for six months). Any amounts owed after that time will incur the full cash advance rate” or some such similar language.

If you are the sort of person who usually pays off your balance each month, then you want to look at fees. Check for the annual fee, participation fees (usually these only apply to credit cards for those with damaged credit), cash advance fees, payment by phone fees and other fees which may be listed. Be sure to balance those against the interest rates that are charged.

Rewards

The other side of the coin in finding the best credit card for you is considering the rewards that are offered. Rewards typically break down into three major categories:

Cash Back – In this case, the reward is that a percentage of your purchases are returned to you on a monthly, quarterly or yearly basis in the form of cash. Note that the cash reward may not be in the form of cash, but could be given to you as a gift card which you need to use for additional purchases.

Points —Points can be redeemed for a wide variety of things, including airline miles, purchases at select stores and even hotel and car rental reservations. The key thing to remember about a card which offers points is that you’ll pay for diversity. The points are usually not worth very many airline miles or hotel points because the company has to pay for you to redeem them.

Airline Miles/Hotel Points – Finally, for those who prefer to stick with a specific airline or hotel, there are credit cards available which will give you airline miles or points. The two big issues with these cards are that they almost always carry an annual fee and you are locked into using the points from the specific airline or hotel chain your card is associated with.

Bottom Line

Picking the best credit card for you will always involve making choices. You’ll never find a card which offers cash back, airline miles, no annual fee and low interest rates, no matter how good your credit actually is. Therefore, it’s important to weigh all the options in order to choose the best credit card for your personal needs.

George Gallagher is a personal finance and education blogger. He is currently helping students find not-for-profit private education loans.

People run up excessive credit card debt because they don’t use their credit cards wisely. They buy too many things that they think they “need”. Instead of waiting until they have the money for this so-called “need”, they use other people’s money (which is what anyone does whenever they use a credit card) but then find that they cannot pay the debt plus the interest.

The other great problem with the usage of credit cards is the carrying over of the balance by paying just the minimum balance each month. When you as a credit card holder fail to pay more than this minimum balance, the interest on the unpaid debt just keeps mounting and mounting. At standard credit card interest rates, if you had a balance of $1,000 in principal and only (but always) paid the minimum balance each month, it would take you 30 years to pay off the balance. The amount of interest you would pay in that time is relatively astronomical.

Even if you have massive credit card debt that has built up, you can stop losing sleep over it. This doesn’t mean that you will magically erase your credit card debt overnight. You will still have to be responsible for it. But you will be amazed at the power of action.

As soon as you start taking the right action to get control of your credit card debt and the use of your credit cards, you will start sleeping better again, knowing that you are now on the right path to getting out from under the crushing debts and understanding that you are creating a brighter financial future for yourself.

When you feel in control of the situation, you become able to relax and focus and solve the problem in time. In the knowing that you are well on your way to solving the problem, worries ease and sleep becomes easier again.

What You Can Do to Get Control of the Credit Cards

You must be the master of the credit cards. They can no longer master you. There are definite steps that you can take to start down this path to mastery. What you want to do is find out those things that you really have no business charging on your credit cards unless it’s an absolute emergency. Let’s look at some of these.

Food – What would you ever charge food? Food is some of the least expensive stuff you can buy compared to your other expenses. When you charge for food and then carry the balance by paying the minimum you are just jacking up the real price of your food. Furthermore, you are apt to over-spend on more expensive food items that you don’t even need because you tell yourself “I’m charging it so I can afford it”. Never buy food on a credit card unless it’s a drop-dead emergency. Pay off the balance the very next month. Outside of some emergency situation, never buy food that you can’t pay for with cash or with your debit card.

Gasoline – This is one necessary product that people constantly charge that they never should charge under normal circumstances. Again, all you’re doing is driving up the real price of your gasoline, and gas is something that you should pay as little for as you possibly can because you need so much of it. You don’t want to charge something that is going to be burned up before you even pay for it, do you? As with food, always pay cash for gas except under emergency circumstances. If you ever do charge for gas, pay off the balance in full the next month.

Clothing – This is another basic item that you should not charge. It’s understandable if it’s Christmas time and you are buying high-end clothes as gifts. But otherwise, when buying your clothes or those for your children, never charge them. Especially in the case of your children, they will be growing out of those clothes fast enough that it’s not worth your time charging their clothes anyway.

Utility bills – No, don’t put your automated payments on your credit card. Put them on your debit card. It’s all too easy to fall into the trap of doing automated bill payments on a credit card, but once again you then fall into the trap of paying interest on top of the actual bills.

Other automated bills
– More and more, we can have automatic bill pay set up. This is convenient, it saves paper, and it actually cuts down on costs for companies, and they can pass on those savings to consumers. Unfortunately, once again, it’s all too easy to set up automatic bill pay on a credit card. You must use a debit card for these things. By having your credit card billed you just continue to mire yourself in debt because of interest payments and because it’s too easy not to pay more than the minimum balance each month.

Start taking these steps to get your credit card balances under control. If you are quite deep in credit card debt, call up your credit card providers, explain your situation, and see if they’ll work with you to accept lower monthly minimum payments while you get your act together.

You can also see about transferring balances to new credit cards that have lower interest rates. Credit card providers will often lower their interest rates for you if they think that you may be leaving them. And if all else fails, you can always get together with a debt management company. The point is, there are solutions. Stop losing sleep over your credit card debt and start taking action.

About: Hasic M is the editor of Think Credit Cards where he shares his tips on how to find a credit card that you will be satisfied with plus provides you with useful tips on credit card debt elimination.

Their tips are so you can retire at 50 years of age. So, if you are in your 30′s or 40′s, 50 can still be a long way away. I much prefer mini-retirements as advocated by Tim Ferris author of the 4 Hour Work Week.

Their first tip is to have children early.

Families that bring in $59,300 a year will spend $197,700 on average, or $11,000 a year, on each child until he or she is 18.

I don’t have any kids, so I suppose it has made it easy for me to stop working a regular 9-5 job and travel where I want. $11,000 does seem a lot though, and they say for each child.

Their next tip is to save. You can’t argue with this, but it is important not to just save, but to actually save and invest your money in something that is going to appreciate in value like stocks, property and businesses.

Their other tips include, not dipping into your retirement fund, adjusting to economic slowdowns like we are experiencing now and avoiding credit card debt. All no brainer tips if you ask me.

I would suggest people to build multiple streams of income, preferably passive income. Property and internet websites have done pretty well for me, but there are plenty of other ways you can be successful, if you try to get a little creative and think beyond financial advice on sites like the Street.