12 Credit Card Tips that May Surprise You

I don't use a debit card. The safest thing is a credit card because you're using the bank's money. If someone accesses your information, they are stealing the bank's money, not yours. -- Frank Abagnale

That's a tip about credit cards from a con-artist-turned-security consultant -- one portrayed by Leonardo DiCaprio in the movie "Catch Me If You Can." It makes some sense, but don't think that it's not worth keeping your credit card information secure. Having someone misuse your account might leave the bank with a loss, but it will also present you with headaches at the very least.

Here are 12 additional credit card tips that may surprise you.

1. Negotiate for lower interest rates

Many people don't realize this, but you can often call up your credit card lender and negotiate a lower interest rate. This is especially likely to work if you've been a longtime loyal customer. According to CreditCards.com, 69% of cardholders who asked for lower interest rates got them, 87% of cardholders who asked for late fee waivers were successful, and 89% of cardholders were given higher credit limits when they asked.

2. Move your debt if you need to

The debt you may have racked up on one credit card doesn't have to stay there. If you're being charged more than you need to be on your credit card debt, you may be able to transfer that debt to another card -- one with a lower rate and perhaps even an extra-low initial "teaser" rate. (Here are some of the best balance-transfer cards -- and some good low-interest rate cards, too.)

3. Be smart about balance transfer cards

If you're looking for a good balance transfer card, aim for one that will charge you no interest for anywhere between 15 billing cycles and 21 billing cycles. The longer the period the better, but even 15 billing cycles can be enough depending on your situation. (Be careful if you still owe money after those interest-free cycles run out, as some cards will then start charging you a steep interest rate.) Know, too, that some cards will charge you about 3% to 5% of the amount you transfer from another card. That can still be worth it sometimes, but favor cards that charge no such fee, at least in the initial period when you make your transfer.

4. Choose the best credit card(s) for yourself

All cards are not created equal. It's best to choose and use the card(s) that best fit your needs and spending habits. For example, if you charge a lot at many different places, you might opt for a general-use cash-back card. If you spend a disproportionate sum at Amazon.com, you might want a card that gives you a generous percent of cash back at Amazon. Those who travel a lot might want to use travel cards to rack up points or miles that can be applied toward airfares, hotels, and so on.

5. Collect cash when you spend

Speaking of cash-back cards, don't ignore them and their power to put a lot of money in your pocket. Some cards will pay you 1% to 2% on everything you charge, while other cards will offer you 3% or 5% or even 6% on certain spending categories -- sometimes rotating them. Getting 2% back on $10,000 in annual charges amounts to $200. If you get 3% back on groceries with a card and spend $10,000 on that category each year as some families do, you're looking at $300 in cash.

6. Use credit cards to build a good credit record and score

Being responsible about your credit -- paying bills off on time and in full -- can help you build a great credit report and credit score, and that, in turn, can get you very favorable interest rates when buying a home, getting a new car loan, and so on. Consider the table below, which shows you some recent sample interest rates that borrowers with various credit scores might be offered -- and what kind of difference the rate will make in your payments.

If you were borrowing $200,000 via a 30-year fixed-rate mortgage and you had a top FICO score in the 760 to 850 range, you might get an interest rate of 3.568%, with a monthly payment of $906 and total interest paid over the 30 years of $126,051. If your score was 630, though, your rate would be very different: 5.157%, with a monthly payment of $1,093 and total interest of $193,449. That's $185 more per month ($2,220 per year) and a whopping $67,398 more in interest.

7. Check your statements each month

Don't assume that each month's credit card bill is correct. Look each one over carefully, as there may be an erroneous charge or two on it. You might also find that you're being billed for things you weren't aware of, such as automatic magazine renewals.

8. Don't have too many cards

Having too many cards can count against you on your credit report and your credit score. Yes, more cards means a higher overall credit limit, giving you a lower credit utilization ratio (the percentage of your total possible debt that you owe) -- a good thing in the minds of lenders. On the other hand, a hefty total credit limit means you could rack up a lot of debt to lots of lenders, and that can make a particular lender nervous. Too many cards can make it temptingly easy to spend more than you should.

9. Avoid cash advances

Steer clear of cash advances, or at least be sure to read the fine print related to them before using them. They typically feature fees, which can be as much as 5% of the sum withdrawn, and they start charging interest immediately, with no grace period. For a $1,000 cash advance, you might pay $50 in fees and more than $10 in interest!

10. It's a really bad idea to just pay the minimum

Of course, it's better to pay more than the minimum due when your credit card bill arrives. But you might not appreciate just how much better it is. Paying the minimum will keep you in debt for a very long time, and will rack up major interest revenue for the credit card company. Check out this example: Imagine that you owe $20,000 on your credit card(s) and that you're being charged a 25% interest rate. If your minimum payments are 3% of your balance, you'll be starting out paying a whopping $600 per month, meaning you'll have to come up with $150 per week. If you can't, your balance will be growing, digging you deeper in debt. What if you do make that $600 payment and all future 3% payments? Well, according to a Bankrate.com calculator, it will take more than 30 years to pay the debt off, and your total payments will exceed $63,000 -- all for a $20,000 balance owed.

11. Beware of fees

Credit card issuers rake in a lot of money from fees. According to industry research organization R.K. Hammer, credit card fee and interest income topped $163 billion in 2016. Some $12 billion came from penalty fees -- such as the ones levied when you're late paying a bill. Another $12.5 billion was generated by annual fees, while cash advance fees totaled a hefty $26.6 billion. Try to avoid any fees you can. You can avoid annual fees (which are often $75 or $100 and can sometimes exceed $500) by simply choosing cards with no annual fee -- and most cards actually don't charge annual fees. You're not out of luck if your card does charge one, though, or if a card that would offer you great rewards charges one. According to a report by CreditCards.com, 87% of cardholders who contacted their card issuers were successful in lowering or eliminating their annual fee. Some 31% negotiated the fee to a lower amount, and 51% got it waived entirely. If you're a good customer, it can't hurt to ask.

12. Beware of the "Penalty APR"

Finally, avoid getting a card that features a "penalty APR," because that means if you're late with a single payment it might immediately hike your interest rate into the stratosphere -- often to between 25% and 30%! If your card already has that feature, either close out the card or be sure to never trigger that rate, as high interest rates can make it extra easy to end up neck-deep in credit card debt. These days, even cards with the lowest rates are sporting rates between about 12% and 14% -- at a time when the highest interest rates banks will offer you in a savings account are only about 1.3%.

Imagine that you owe $10,000 on cards and are unable to pay it all off. If your interest rate is 25% and you just leave the debt there, you'll soon owe $12,500. A year after that, you could owe $15,625. If you charge anything else to the card, your balance will keep growing. We would all love to earn annual returns of 25% on our investments -- and that's just what the card issuers are doing here. Credit card debt is like investing in reverse: instead of your net worth rising over time, it shrinks, with potentially catastrophic results.

Finally, don't let yourself get too discouraged if you're carrying a lot of debt. For one thing, you're not alone. And better still, many people have paid off tens of thousands of dollars in debt, and gone on to live financially healthier lives. You can, too.

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Selena Maranjian owns shares of Amazon. The Motley Fool owns shares of and recommends Amazon. The Motley Fool has a disclosure policy.