Let's face it:  Credit cards cost most people money.  They encourage consumers to buy things they can't afford with the promise of being able to pay them off over time, leaving people to think that this is a valid money management strategy.  In reality, this is, at best, a waste of money and, at worst, the beginning of a slippery slope toward significant debt and even bankruptcy.

Though some financial experts advise against using credit altogether, this one solution isn’t necessarily the best fit for every family. For some people, credit cards can put them ahead when used wisely.  If you have zero consumer debt from month to month and are not tempted by credit card companies' promises, you can leverage your cards to save money on every purchase you make.

If you choose to play the credit card game, there are some basic rules you must follow.  Otherwise, you're not using your credit cards—they're using you!

  • Always pay on time.  Never incur late fees.
  • Never carry a balance.  Don't buy things you can't afford to pay cash for the instant you charge them—not in two weeks when the bill comes in!
  • Don't open more than one account every six months.  Otherwise, your credit can suffer.
  • Don't close unused accounts.  This, too, will give your credit a hit.  Cut up the card but keep the account open.
  • Keep a list of your cards in case they are lost or stolen.  You shouldn't have to run a credit check on yourself to make sure you've canceled everything.

With that out of the way, let's cover the strategies on how to use credit cards—and not let them use you!

General purchases

  • For most purchases, use a basic card that gives the highest rate of cash back you can find.  Put everything that doesn't need to go on something else onto this card.  My card always gets me 5% back on groceries, 3% back on gas, 3% on department stores, and 1% on everything else.  And I got paid $150 to sign up!  My husband, who doesn't like juggling cards, uses only this one.
  • Consider keeping another card in play that features rotating seasonal specials to catch 5% cash back promotions in other categories.  (After many years, we now have two of these with different schedules.)
  • Turn cash back rewards into higher-value gift cards of stores you shop frequently.  With one of my credit cards, I never take cash but buy either a $50 Lowe's card for $45 or a $25 Bed Bath & Beyond card for $20 through the rewards program.  That makes my cash back worth 11-25% more.

Store-specific cards

  • If a store offers regular or significant extra discounts for their cardholders or store credit that doesn't expire, get the card.  If the store has "points" systems or dollar rewards that expire after a certain window, skip it.  Never again shop at the stores for which you have cards unless you are stacking a sale with a cardholder discount.  Stores that are worth it:  Target, Kohls, Macy's, TJ Maxx, Victoria's Secret, Old Navy.  Stores that aren't:  Sears, JC Penney.
  • If you are buying a big-ticket item, a one-time discount may be worth it.  I saved my parents over $150 when they bought a swing set for my kids by signing them up for a Toys R Us card.  Home Depot and Lowe's sometimes run specials on their cards, giving 10% off the first purchase after opening an account.  If you happen to be buying a kitchen's worth of appliances or you are re-roofing your house, go for it.
  • Don't use store-brand credit cards outside the store without a big incentive, even if they are also a regular Visa or MasterCard.  Often, you will then be sent offers in the mail promising disproportionate rewards for minimal uses.  By not using my cards, except when I was offered special rewards, I have gotten about $30 in store credit from Toys R Us and $65 from Old Navy.

Feel like credit card companies are exploitative?  If you're not tempted by their blandishments, exploit them back!  Your pocketbook will thank you.

This has been a guest post by Genevieve from Bowie, MD
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