5 Simple Ways to Save Money on Your Credit Cards

Want to save money on your credit card bills? There are five simple solutions.

After a dip in their usage during the financial crisis, credit cards have continued to become popular again for all consumers. Financial reporting company Experian noted that the average balance per consumer in the U.S. stood at $3,779 in the first quarter of last year. Yet Americans everywhere can save money by following just one of these essential tips.


Source: Images of Money on Flickr.

1. Take advantage of available offers
Countless companies now offer cash-back rewards on everyday purchases. Yet some companies offer variable ones that should be recognized and taken advantage of. For example, if Discover (NYSE: DFS  ) is offering 5% cash back on gasoline purchases, as it has previously done in the summer months, you should only fill up using that card.

Source: Images of Money on Flickr.

Not only that, but Discover, Bank of America (NYSE: BAC  ) , and other merchants will also offer rewards from specific merchants whether locally or nationally at the simple click of a button. Exploring the site of your credit card may be all it takes to put money back in your pocket on purchases you already make.

2. Understand the costs
Right along with reading the fine print is understanding the tangible cost of each card. While the difference between a 15% and 18% annual percentage rate (APR) may not seem like much from the outset, it can make a monumental difference if the credit card has a balance on it.

Carrying a $1,500 balance at 15% would be $45 cheaper over the course of a year than carrying one at 18%. If you had to pay an annual fee of $30 to secure a credit card with lower rate, you'd still end up ahead.

3. Pay bills on time
This should come as no surprise, but another essential way to save on a credit card is by paying the full balance on time each month. This eliminates the opportunity for banks to charge interest on the balances, but making late payments is a key contributor to lower credit scores, which leads to higher interest charges and fees.

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One late or missed payment on a balance of $2,000 could result in both a $30 late fee and another $30 in interest charges if the interest rate on the card was 18%.

In addition, borrowers run the risk of having not only the fees and interest rate increasing on the card with a missed or late payment, but also on their cards at other banks and credit card companies.

4. Use the tools the companies give you
Almost every bank or credit card company these days offers ways to analyze spending, which can provide a monumental benefit in understanding exactly where your hard-earned money goes. In addition, companies allow for automatic bill payments to help eliminate those late or missed payments, and even let you set how much of your balance you'd like to pay each month. Many companies too will allow for text message alerts that let you know when your monthly balance exceeds a limit you set to better control spending habits.

Source: Gabriel B. on Flickr.

5. Don't hesitate to call
While customer service and leniency of each company varies, sometimes if a fee is charged after a payment is missed, all it will take is a simple phone call to customer service letting them know of the situation to see if the fee can be waived. Whether it is an error on their part or yours, calling in and asking the question is critical step.

From saving to investing
Although it may be tempting to spend all that money you've saved, the best thing to do would be to turn it around and invest it. With the markets going to new highs each week, many are beginning to wonder if they've missed out. But there's still time. In our brand-new special report, "Your Essential Guide to Start Investing Today," The Motley Fool's personal finance experts show you why investing is so important, and what you need to do to get started. Click here to get your copy today -- it's absolutely free.


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