How to save on your credit card bill

By Mark Bullock - bio | email

MONTGOMERY, AL (WSFA) - With the economy in the tank, pinching pennies is on everyone's minds these days. So WSFA 12 News is reviving its series, Money Saving Mondays. Tune in each Monday night at 10:00 in November for tips to help you stretch your budget.

This week, the focus is credit card debt. You can't do anything about rising prices at the gas station or the grocery store, but if you pay with credit, you can avoid an inflated bill.

Rule Number 1, according Roger Knauff of the Consumer Credit Counseling Service of Alabama, is to shop around for the right credit card -- one that does not have an annual fee.

And speaking of fees, check to make sure you're not paying extra cash for a monthly service you don't need, like credit protection or insurance.

"You ought to know whether it has any value to you and if not, get rid of it," said Knauff.

Rule Number 2 is perhaps the most important -- pay off your bill!

"It doesn't make sense to finance meals and other living expenses, so pay whatever you charge this month," Knauff explained.

If you don't pay your entire balance, you'll end up paying a finance charge.

Rule Number 3 -- If you can't pay everything up front, ask your card company to reduce your interest rate.

There's a special phrase you can use when you call. Some of us at WSFA 12 News tried it out. While it didn't work every time, it does work for some customers. Here's the phrase you can try:

"Hi, my name is _______. I'm a good customer, but I've received several offers in the mail from other companies with lower annual percentage rates. I really want a lower rate on my card. Can you help me?"

If the answer is no, ask to speak to a supervisor. If the answer is still no, call again later and try with another agent.

You must, however, actually be a good customer. The credit card companies usually make their decisions based on your credit score and your payment history.

"They want to keep you as a customer and threatening to go to another company because you have a better rate offer is worth a try," Knauff told us. "It's a free call, so there's nothing to lose."

Rule Number 4 -- Another way to keep from paying too much in interest is to pay at least your minimum payment. Then, keep paying that same amount even if your minimum goes down.

"If I pay $70 this month on a debt and never pay less than $70, even though they may be billing me much less, I'm going to be saving in the long run," Knauff explained.

Rule Number 5 -- Know when you can't afford to use a credit card at all.

"If you're living so close to the edge that one paycheck would put you behind on all of your bills, then you don't need to be using credit," Knauff said. "You should stop using credit and work towards paying yourself out of debt."

If you find yourself in that position, there are credit counseling agencies that can help. They offer advice on how to stick to a budget, how to apply for a consolidation loan, and how to work with your credit card company to establish a payment plan. They can even talk to your creditors for you.

But you have to make sure you don't get ripped off. Click on the web extra video in this story for tips on finding a reputable credit counseling agency.