Smart ways to be a more savvy credit card owner


(MoneyWatch) Credit cards are surprisingly complicated financial instruments. You might think of your credit card as a slab of plastic that lets you defer payments for a few weeks each month, but in reality credit cards often come with a number of interest rate tiers, complicated repayment policies and a dense collection of perks and features. Odds are, you're underutilizing -- or misusing -- your card. Recently, personal finance blog WiseBread rounded up a number of recommendations for making better use of your credit cards. Here are the tips that I think are the most valuable.

Pay in full each month. This probably doesn't need to be said (right?) but you shouldn't ever maintain a balance on a credit card; the interest rates are egregious. Credit cards are a great tool for deferring payment on bills, expenses, and incidentals for a few weeks each month, and consolidating all those payments into a single charge. And that's it.

Sign up for autopay. Signing up for autopay ensures that you will never miss a payment and consequently get hit with a finance charge for that payment period. After all, using a credit card for routine bills and expenses is convenient and logical -- as long as you always pay off the card at the end of every month. Rely on autopay to avoid making a costly mistake.

Set your own due date. Most credit cards let you specify the date you want to pay. It's very much in your best interest to take advantage of this -- you can align all of your credit cards so they're due on the same day, for example, and you can also ensure that the due date is at the right time of the month, such as right after payday, rather than before.

Use the right card for the job. This means understanding what the perks and features are for each of your cards. If one card offers 1 percent cash back on all purchases but another offers 5 percent back on gasoline, it makes sense to use the 5 percent card when you fill up your car. Cards aren't commodities; don't treat them that way.

Spend your rewards wisely. You might be inclined to simply channel all of your rewards into cash back, but some cards have very attractive travel programs and other reward structures which might make more sense. With the right card, for example, you might turn what would ordinarily be $500 worth of cash back into $2000 worth of travel perks like airline miles or hotel stays.

Use each card at least once a year. You might have a collection of cards that you rarely, if ever, use, and rely primarily on just one or two cards. That's fine, but be aware that credit card companies are increasingly moving to cancel cards that never get used -- and that can adversely affect your credit rating. To avoid having your card cancelled unexpectedly, use every card you own at least once a year.