Savvy Credit Card Tips!

Ignore the hype, it appears we're cleverer with our cards than we realise - and smart users can gain even more by following these tips.

We all know that the unwise use of credit cards can severely damage your wealth. With most cards boasting APRs of 15% or more, they're an expensive way to borrow and with many finance companies offering ridiculous levels of credit, it's perfectly possible to achieve a quite scary level of debt, even for those on relatively meagre salaries. It's therefore perhaps not surprising that personal debt (including mortgages) in the UK is currently over £1.2 trillion, and growing fast.

The following tips could help you get the most from credit cards:

Always pay the balance off in full, each month.
If you have an outstanding balance on your card, consider saving money by transferring that debt to a 0% balance transfer credit card (but check the fees carefully, ideally choosing a fee-free option).
If you always pay off your balance in full, make sure you are rewarded for your diligence by using a card that gives something back (cashback credit cards, cards that earn loyalty points, airmiles etc).
Careful use of a 0% introductory period credit card could help you budget if you have large, expensive purchases to make. Alternatively, spending on the card whilst saving that cash in a high interest savings account could make you some money.
Finally, if you can't trust yourself to be sensible with a credit card, don't have one. Use your debit card instead!

And interestingly, it appears that we as a nation may finally be listening! A report on credit card spending for 2005 from the Association of Payment Clearing Services (APACS) has revealed a shift in cardholder behaviour.

For a start, the amount we are spending is levelling off, having risen just one per cent to £124bn, whilst the number of transactions has fallen by one per cent, to 2.1bn. And most interestingly, while we are spending less, we also appear to repaying more. The number of card holders who repaid their credit card in full each month rose from 56% to 59% with 95.3% of all spending in 2005 repaid in full - meaning that credit card repayments have overtaken spending for the first time. Impressive!

And while we're using our credit cards more responsibly, our love for all things plastic hasn't waned as our old favourite, the debit card has become even more popular. Debit card spending in retail outlets overtook cash spending for the first time in 2005, and although the majority of these transactions were for relatively small sums, more of us are using our debit cards for larger transactions, such as car purchases, too.

So what has caused our decline in credit card use? Well, APACS has suggested that nervousness about economic growth could be an issue. And with worries about consumer spending being a major topic of speculation for the media, more and more of us may have started thinking sensibly about our finances.

So if you want to get the most from your credit card, follow the tips above. And remember that, whilst the last few years have proved profitable for large numbers of "rate tarts", banks are fundamentally concerned with making a profit, hence the introduction of the (uncapped) balance transfer fee. If you're intending to shift your debt to a 0% balance transfer credit card, do your sums carefully as you may not save as much as you'd hoped. You may even find that a low interest credit card would save you more.

And don't forget that a cleverly used credit card can save you a fortune - picking the right one for you could result in you benefiting from free shopping vouchers, Airmiles or days out.

Compare credit cards today here at the Fool!