Usually, when people talk about saving money, the first advice they give is to ditch the credit cards.  It’s good advice (to a point), but it doesn’t really take into account real life situations.  Truth be told, we all depend on credit at one time or another.  It might be a bank loan, a credit card, or even a short term payday loan; but whatever form it takes, it certainly comes in handy when we need it.  Still, we’re all trying to save money these days, and learning to manage your credit cards is a step in the right direction.  So, if you have a MasterCard or Visa lurking in your wallet, consider these tips to help keep your credit cards and still save money.

Research Before You Apply

Banks make applying for credit cards quick and easy.  But they are not thinking about your convenience, they are thinking about their bottom line.  Before applying for any credit card, do your research.  Fully read the user agreement, and comparison shop for cards that offer lower interest rates and fewer fees.  Remember, once you qualify for a credit card you are locked into a contractual agreement.  If you’re looking to save money, and keep your credit cards, knowledge is financial power.

Limit Your Number of Cards

It is important to keep the number of credit cards you own to a minimum.  Don’t apply for another card simply because you are swayed by a tempting introductory offer.  One or two basic cards is enough for anyone.  The more cards you have, the more fees you will have to pay.  More to the point, extra credit cards make it the more tempting to overspend.

It’s time to buy a souvenir by José Manuel Ríos Valiente, on Flickr.  This work is licensed under a Creative Commons Attribution-NoDerivs 2.0 Generic License.

Adopt Good Payment Habits

Credit cards are convenient, but if you don’t manage your payments properly you can soon get into trouble.  Always make your payments on time to avoid any penalties or late fees.  Make it a habit to pay more than the monthly minimum payment.  A lower debt profile means less interest, so the quicker you can reduce your credit card balance the more money you can save over time.  Adopting good payment habits can not be stressed enough.

Reward Cards

Credit card reward programs can be a great way to earn money while you spend.  However, reward programs come at a price.  Most credit cards offering rewards for spending come with a higher interest rate.  So, it is important to understand that to fully benefit from a rewards program you must be able to fully pay off your credit card balance each month.  Otherwise, you will not fully realize the benefit of the rewards program.  Before signing up for a credit card rewards program, be sure that you are prepared to pay off your balance on time, every time.

Consolidating Your Credit Card Debt

Many credit card holders try to save money by consolidating their debt.  This is a good money saving strategy, IF it is handled properly.  Essentially, you are transferring your existing credit card debt to a new, balance transfer, card.  Balance transfer cards typically offer 0% interest or low APR on your transferred balance.  However, this offer is only made for a limited time, and following the introductory period your APR will return to a higher rate.  When considering a balance transfer, ask yourself if you will be able to pay off the balance before the introductory period expires.  Also, most cards charge a fee, usually 3% of your total debt, when you transfer your balance.  Before you consolidate your credit card debt, make sure you are prepared to pay off the total amount, and that you can afford any attendant fees.

Saving money does not necessarily mean you have to lose your credit cards.  But it does mean that you need to fully understand your responsibilities as a credit card holder, and that you understand how to manage your finances.  Before you cut up those credit cards, consider the ways you can save money and still maintain good credit.