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Having credit is something everyone should try to cultivate as soon as they can. This typically means paying your utilities and rent on time, and getting lines of credit at businesses or through credit card companies.

For many people, lines of credit are easily managed – they don’t have any concerns. For others, the idea of managing credit cards seems Herculean and difficult. If you fall into the second camp, then this article is likely for you. There are a lot of horror stories out there about people who have had years of financial progress destroyed by credit cards, but with a little planning and information, you won’t be one of those people.

How to Reap the Most Rewards with Credit Cards

Read the fine print

Credit cards have a lot of stuff going on but they break down to a few simple, standard attributes. These include your annual percentage rate or APR, your credit limit, and perks. Some credit cards however will have an annual fee on top of the APR; these are almost universally to be avoided. If a card charges a yearly fee, it’s probably a secured card for people who are just starting to build credit, or who have bad credit. Either way, paying someone a yearly fee to use credit is a bad decision and should be avoided.

Most cards will have a variable interest rate, typically between around 11% to 30% or more. Again, better credit and longer credit history will lower your APR, and your annual interest is what you pay to the credit card company in return for the line of credit. It’s basically what they’re making on the deal.

Finally, your credit limit is the amount you have to spend. Many first time credit users find their first card is a store card; something from Best Buy or Old Navy where you can only use the card at that particular store. These credit limits are generally low, and the interest rate is going to be higher, but they approve them for nearly anyone, so it’s a good first card for consumers looking to build credit.

Find the best perks for your lifestyle

One of the earliest credit card perks most people can remember are frequent flyer miles. These were basically points that allowed you to take free plane rides when you’d accumulated enough, based on your spending. The main issue with this type of program is that if you don’t fly very much, how useful are these miles?

Now there are so many different rewards programs that you can find something even that caters to where you spend money the most. For instance, Discover offers a program that has a revolving cash back offer each month. Some months it’s 5% back on dining out, and other months it’s 5% back on retail purchases. This is usually in addition to a flat 1, 2, or 3% back on everyday purchases. This cash back is then either sent to you or applied to your bill.

Finding a program that fits your needs and provides good bonuses is absolutely one of the most useful parts of getting a credit card. Other credit cards like Care Credit offer periods without interest for purchases exceeding a certain dollar amount. For example, say you spent $200 at your vet’s office, Care Credit might offer you 6 months to pay that balance off without any interest at all. That’s a really great deal and it’s something that some companies are offering more often.

how to make the most of using credit cards

Pay off your balance each month

Barring scenarios where an emergency arises and you have to charge a significant amount to your credit card, paying off your balance each and every month is the best way to use credit cards. By paying it off entirely you not only avoid interest charges but you show exceptional credit-worthiness. In addition, if you have a card that pays you a percentage cash back on purchases, you are essentially earning free money by paying your bills off each month.

A good example of this in practice is a card that pays let’s say 5% back. Set it up so your utilities are charged to the card each month, and then pay it off entirely with the money you would have allocated to your bills. If your total utility bills were $200 and you charge them to that card, by paying the card off entirely, you basically got paid $10 to do something you would have done anyway. It requires diligence but it’s a total win-win.

Find cards that offer sign-up bonuses

Many companies are using increasingly substantial reward programs to entice new customers. This is great for you as many of these rewards are upwards of several hundred dollars after 3 months of using the card. Coupled with the habit of paying the card off each month and an incentive program that pays you cash back on purchases, you can actually make money using credit cards.

If you carry a balance on a card – something that’s not always necessarily bad – you can use a balance transfer incentive perk as well. Some cards offer incentives for transferring a balance from one company to theirs, and you can take advantage of that as often as you have the opportunity. Again, be careful and understand what you’re doing by carrying a balance. If your finances are secure and you feel you’re responsible enough, however, this can be a great way to get some nice infusions of cash throughout the year.

Credit doesn’t have to be a four-letter word

For many people, credit cards are just frightening, but it doesn’t have to be that way. Credit cards are a system, and though they might have variable interest rates, the rest of the rules around each card are set-in-stone. If you take the time to understand how your credit card works, then you can use it to your advantage and never have to worry about getting over your head in debt.

Moreover, you can use credit card perks to earn extra air travel, build your credit and earn money on purchases you were going to make anyway. So don’t be scared of credit cards; be brave and use them wisely, and you can profit from a system that’s intended to profit off of you.

Do you have any credit card tips and tricks?

We’d love to hear about them in the comments!