Many people have protested the practices of credit card companies that cost consumers hundreds of dollars more than they believe is fair.  The displeasure of the public has become so loud about these practices that Congress created the Credit Cardholder’s Bill Of Rights to reduce or eliminate practices that could be considered predatory.  There are many things that you can do on your own to save money on your credit cards and implement these measures has the potential to save you hundreds in credit card fees every year.

Pay Bills As They Arrive

To avoid considerable fees to your credit card account, it is better to make payments as soon as you have received the bill.  This ensures that your payment will not be received late.  Late payments give credit card companies plentiful opportunities to charge you more money, including skyrocketing the interest rate for the card to the highest allowable limit that is often close to 30%, late payment charges that could be as high as $39 per occurrence, and over-limit fees, which could add another $39 charge to the balance of the account.  A single missed or late payment could cost the person $80 or more in fees and interest rate hikes.

Keep Usage Minimal

Although the temptation to place purchases on your credit card can be very high, going this route will cost the person a large amount of money.  In addition to the interest charges and finance charges, there is a good chance that the person will spend more than they can afford to repay, will go over their credit limit triggering additional charges, or will carry a balance on the card which allows the company to charge high fees for using the credit card.  The best way to use a credit card is to use the credit card for emergency purchases only and to pay cash for everything else.

Pay Off Your Balance Monthly

One of the easiest ways to save money on your credit cards is to never charge more to then than you can pay off each month.  Carrying a balance on the credit card will result in finance charges and interest fees that can add a significant amount to the amount that will need to be paid off.  These charges cannot be levied before a certain period of time has passed, so paying off the credit card in full before these charges are levied results in an interest free loan for the month.

Advertisers have made an art out of making something seem like it is a great deal, especially when it is not.  There are tons of phony bargains out there waiting for you to spend your hard earned money on them, but being able to identify them for what they are will make you much less likely to fall for the tricks.  Here are some false bargains that you can definitely do without.

Frequent Flyer Reward Credit Cards

When these credit cards first hit the market, they were the latest thing and their popularity skyrocketed to where nearly everyone who flew periodically had some type of frequent flyer reward credit card.  Now that the novelty has worn off, many people are seeing that these credit cards are not such a great thing after all.  In the intervening years, the benefits have shrunk, the number of seats available has decreased, booking fees are imposed for most flights, and the number of miles needed to redeem a reward has increased dramatically.  A better choice would be a reward credit card that offers cash back on your purchases so you can choose what to purchase with that money.

Interest Bearing Checking Accounts

A checking account that earns interest for the account holder sounds like a great deal – until the terms and conditions of the account are read.  Most interest bearing checking accounts offer a very small interest rate, often less than 0.25%, but require high minimum balances to avoid monthly maintenance fees on the account.  For example, the average minimum balance for these checking accounts is $3,400, an amount that will earn less than $5 in annual interest, but dropping below this amount could cost you $25 per month in maintenance fees for the account.  You are much better off opening a free checking account that does not pay interest and has a much lower minimum balance requirement.

Going Out Of Business Sales

Many people go to “going out of business” sales expecting to actually see fire-sale prices, but this is often not the case.  In order to make as much money as possible, many closing stores advertise sale prices that are not much different from the prices you would have paid before the liquidation started.  Price shopping competitors will quickly show you that there is not much difference in the price and you may be better off buying the item from a competitor that will be around long enough to handle any issues that arise with your order.

Many people believe that lowering their credit card interest rates is an impossible task and they do not even try to get the rate that they pay reduced.  They would be surprised to learn that it is possible for anyone to lower their credit card interest rates by using some simple and efficient methods.  One of the best ways to lower these interest rates is to negotiate with the creditor directly and ask for the rate to be lowered.

How Are Interest Rates Determined?

The interest rate that is assigned to a credit card account is determined by the credit card issuer and based on a complicated formula that assigns a level of risk to the account based on the credit score and payment history of the account holder.  Different types of credit cards will have different minimum and maximum interest rate levels, with the lower interest rates going to the individuals with the highest credit scores and the higher interest rates offered to the applicants with the lowest scores.  There is a legal limit to the amount of interest a credit card issuer can charge and many sub-prime credit card lenders charge this maximum.

Lowering The Interest Rate

If the account holder has been doing business with the company for several years or more, they may be able to lower their interest rate by negotiating directly with a representative of the company.  This representative will be able to look up information about the account, including how long the account has been opened and whether the account has remained in good standing during that time.  If the representative is able to see a clear pattern of responsibility and timely payments, they will be more likely to flag the account for an interest rate reduction.

A significant improvement in the account holder’s credit score can also result in a reduction in the amount of interest a person pays for their credit cards.  Individuals that regularly check their credit report and credit score should contact the companies that issue their credit cards when their credit score reaches a new level, such as moving from fair to good or good to excellent categories.  A reduction of a few percentage points in the interest rate for a credit card can save the person thousands of dollars over the years that they hold the account.

If you’ve discovered you no longer qualify for traditional credit cards due to a low credit score, there are some other credit card options you might want to consider to start rebuilding your credit:

Prepaid Credit Option

Some companies issue prepaid credit cards and report your payments to the credit bureaus. The prepaid nature of the cards makes it possible for people with poor or bad credit scores to qualify; and the fact that some will report to the credit bureaus means you have the opportunity to begin rebuilding your credit again.
Since you’ve prepaid, there are no interest charges on purchases and no billing statements to worry about. Most prepaid cards have fees, however. From an opening fee (around $10) to monthly maintenance fees (usually another $9.99 a month) to per-transaction fees and fees when you add money to your card – the prepaid cards can end up costing you a fortune.

If your goal is to rebuild credit, make sure you choose a prepaid card that reports to credit bureaus otherwise you’re paying a lot of fees for no benefit. A prepaid card with the Mastercard or Visa logo can come in handy if you need to rent a car or reserve a hotel or flight and you don’t have any other credit card options available to you.

Secured Credit Card Options

A secured credit card is a step up from the prepaid card. They almost always report your payments to the credit bureaus and can work in your favor to rebuilding your credit. Basically, you make a deposit to the issuing bank (around $500 usually). Your credit line will usually start out at the amount of your deposit, but with on time payments they will often increase your credit line.

Credit Union Credit Card Options

If your score is in the fair or better range, you might check with a local credit union before exploring other options. Credit unions are less likely to charge the high fees and penalties that traditional credit cards charge, have lower or no annual fees and longer grace periods for making payments. If you qualify for credit union membership, you should look into opening an account with them (savings or checking) and then consider them for your credit or loan needs, too.

You can find credit unions by visiting www.creditunion.coop or calling (800)358-5710.

Credit cards have historically been used by consumers for their flexibility, instant gratification and protection from unexpected events.

Those benefits have of course come at a high price, as Americans and others have racked up huge debt loads which have weighed them down for years and made it difficult to do anything but live from paycheck to paycheck. This is true not only with low-income people, but for many with high incomes as well.

Although it’s always better to build up a cash moat in preparation for potential difficult economic times, many do use a credit card for that same purpose. That could get more costly in the years ahead as banks and other financial institutions scramble to find ways to deal with the regulatory climate which has made it harder for them to generate revenue and earnings from their credit card services.

So for those of us looking to save money and build wealth, we have to take a serious look at whether there is really a need to use credit cards in light of how costly they’re going to be going forward, and if it’s worth the high interest rates and debt incurred from them.

We know that higher interest rates will obviously cost us more, and when we pay more to pay off debt, we have less capital to save.

The question then becomes whether there are times when using a credit card is worth the extra cost and debt load.

Other than the situation mentioned above of having one available for emergency use, it’s doubtful whether using a credit card really helps us other than to satisfy our desire for instant gratification.

If we don’t have a cash fund built up to protect us, then it may make sense to have a credit card available for use until you’re able to build up personal cash reserves. There will be some fees associated with that for sure, and you may have to use it occasionally to keep it activated and worthwhile for the company issuing it, but just be sure to pay back the borrowed funds quickly before you get hit hard by interest rates.

Some financial advisers have recommended using a credit card to make certain types of high-end purchases in order to protect themselves from certain types of fraud.

I’m not that big of a fan of that, as if I’m going to make a big purchase, I’m going to do it from a trusted store and not from someone I’m not sure of.

Consumers shouldn’t go out and buy a big item primarily on low prices, unless those lower prices are offered by reputable and well-known companies. So the idea of using a credit card for large purchases in order to protect yourself from fraud loses the impetus of its argument when taking into account buying from a trusted store.

No matter what the circumstances, it’s still better to buy with cash or debit cards than going the credit route, as it leaves you in a stronger financial position and provides you with more money to invest with and build up your savings and wealth.

Soon it will be vacation time across America. And while current economic conditions are forcing many to scale back on vacation plans, there are some ways that you can use your credit cards to help you save on vacation activities.

This assumes that you have less than 50% available on your balances. This is a must in order to be able to prevent from going over your limit and incurring charges because of it.

Obtain a cash rewards credit card. This is essential because with one of these cards you can earn cash-back on regular purchases. If you are a regular traveler for business, then a travel related rewards card would be most appropriate. The idea here is to get the maximum amount of cash back from your use of your card during the time you will be gone. Getting this money back is like having your vacation pay you money back on the things that you purchase.

Do some homework. Before you leave on your trip, investigate the location to which you will be going and find restaurants and other places that you will be patronizing. Look each place up on the Internet in order to find coupons and discounts that are offered which will help you lower your costs for the vacation. If you do not find any, pick up the phone and call those locations and ask about discounts and coupons. Keep in mind that some of these locations may only place things like this in the local newspapers. Find out if they do and where you can obtain them since you live outside of that area. Make sure that they know that you are coming to the area to spend money with them and are looking for ways to keep your costs in check.

Ask for better prices. This one you have to be careful with because you do not want to make sales clerks and merchants angry. However, saving money means being wise when it comes to the prices you pay. Many people leave their ‘money sense’ at home when they go on vacation and pay too much for items that they would immediately reject at home. You need to take your common sense with you, and if you have to, refuse to make some purchases if the costs are too high. Instead, find less expensive items that will help give you that sentimental feeling about your vacation, but not leave you broke at the end.

Take some things with you. Avoid making purchases when on the road for things that you can easily get before you leave. Like snack items and drinks. Truck stops and convenience stores make the majority of their profit on these items, not the fuel that you buy. Make a list before you leave and take what you can fit in your vehicle. Or, if you are travelling by air or other mass transportation system, do not make these purchases in large quantities where you will pay a premium. Wait until you arrive at your destination and then find a more economical solution.

Cut out non-essential things. If an activity is too expensive, then make the decision not to make it a part of your plans. This can be difficult if the vacation is a once-in-a-lifetime type that you never intend to take again. Look for something else to do that will still be memorable, but not carry the high cost.

These tips along with paying for things on your cash-back rewards card can help you have a less expensive vacation while maintaining a fun and entertaining time for everyone. The reason for going to begin with is to get away and be with your family. If you go with that mindset, you will have a good time while spending less money.