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How can credit cards work for you? A financial planner explains

Here are some tips regarding use of credit cards

SAN ANTONIO – Credit cards can be dreaded every month, or be a beneficial way to boost your credit score and earn rewards, free travel miles and cash back. Here are some tips to better manage your credit cards:

CHOOSING A CARD

The list of benefits credit cards use to get you to sign up seem endless. Bottom line: When choosing a card, don't let the freebies fool you.

Remember, if you don't pay off the balance every month they will cost you.

You need to compare the APR, and figure out how much you'll shell out if you don't pay the entire balance off every month.

Also, really understand the rewards program, like what things the cash back rewards actually apply to and the rates.

"I remember when I was in college and I opened my first credit card, I got a free T-shirt, and I was excited about it. Or... you get that rewards offer in the mail and it's maybe offering 5-percent, but again it's only on certain purchases. You really want to make sure you look at the fine print there," USAA certified financial planner Mikel Van Cleve said. "If you are carrying over a balance from month to month, right, you are probably going to be paying a lot more in interest then you are getting in rewards. Your best bet may be to go and look for a credit card that has a lower interest rate, even if it doesn't off any rewards."

Annual and monthly fees are another thing to consider, but they aren't bad if you are getting more in return than the cost of the fee.

STAYING OUT OF DEBT

Credit cards can be a useful tool, but can get you into trouble.

No fear. We have some solid suggestions to keep you out of the red.

It comes down to managing your spending.

Van Cleve says we get into trouble when we don't keep track of how much we spend.

Consumers have the tendency to buy too much stuff on cards since it's credit, not cash, and you don't see it coming out of your bank account.

Then the bill comes and the eyebrows rise.

Van Cleve recommends you treat it like cash, and only spend what you have unless it's an emergency.

There's no magic number as to how many cards you should have.

Have only as many as you can reasonably manage.

"If you've got four or five different retail store cards for example, and you are doing a lot of shopping and maxing those cards out, that's probably too many cards, for you to have, but if you have four or five cards and you're managing them correctly, and (are) taking advantage of rewards, and you are paying those balances off, then you are probably gonna’ be OK in that situation," Van Cleve said.

If you do decide to close some cards, try not to close your oldest accounts. Those show how long you've been in the credit game. Eventually that legacy will fall off your report, hurting your score.

Also closing an account with a balance isn't good as you still owe the money, but you now have less available credit to your name.

That means your ratio of debt to credit is worse off.

Bottom line: Avoid ate payments and maxing out your card. That's what really hurts your score.

GETTING OUT OF DEBT

Van Cleve recommends the three A's to get your finances in order.

First, assess the situation.

Pull together all your bills and figure out which ones are costing you the most in interest payments.

Then attack.

That means aggressively paying down your balances, at least making the monthly minimum payments.

You can start with the biggest balance, or knock off some small ones for quick wins.

Finally avoid.

"At this point we probably want to put those credit cards aside, use cash or a debit card instead, until we can get our debt situation back under control," Van Cleve said.

"Avoiding" is especially true if you are nearing retirement and a fixed income.

COLLEGE STUDENTS

College students aren't known for being fiscally responsible, but they also need to prepare to buy a house or car someday.

A really good idea for young people just starting their adult lives is to get a secured credit card.

The way it works is you put down a deposit, which is equal to your available credit, so the money to cover your purchases is already there.

You are more likely to get approved.

As long as you make payments, it will build your credit score.

"Key is again, just to make sure you are making all your payments on time, and if it's a credit card you just want to just continue to keep those balances low and pay them off in full each month," Van Cleve said.

Repaying student loans is also reported to credit bureaus. Making regular payments on those is another way to build that score.