A credit card is neither inherently good nor bad, it’s just a matter of how you use it.

Indeed, owning a credit card offers numerous benefits; count among them purchasing power, convenience and safety. But these benefits can come at a very high cost as the interest rates on credit cards run up to over 40 per cent in Jamaica. Therefore, you must learn how to use one to your benefit, but this requires diligence and discipline.

Sunday Finance compiled a number of tips to help you take care of your credit card expenses in a frugal way.

Introductory 101: Take up introductory offers, but at the end of the introductory period, close out that account and take up a new introductory offer. For example, if a credit card company offers you a low introductory interest rate on your card, take the offer. You can purchase high-cost items but be sure to have sufficient cash to clear off the balance at the end of the period before you close out the account. Otherwise, you defeat the purpose and get caught in high interest payments on overdue amounts.

Cash-Back Bonus: Carry cards that give you cash back benefits on the items you purchase most often. Use these to maximise your cash back rewards. Almost all financial institutions offer cash-back rewards on their credit cards. Choose the one with the most attractive rewards that are specific to your needs. For example, if you are a frequent flyer, consider taking out a card that offers bonus miles. If the majority of your purchases are on food and household items, consider a card that offers discounts at some of your major merchants. If there is a cash bonus for taking out the card, sign up, collect the bonus, then park the card, but remember that unless you cancel it, you will have to pay the annual membership fee. If you don’t, you will be charged interest and late fees on your account.

Stay Within Your Limit: It is as simple as it sounds. Do not go over the authorised limit on your card. In addition to penalties, this will attract an ‘over-the-limit’ fee.

Pay in full every time: This is the number one rule of managing your credit card. Pay up and pay in full. If you pay your bills in their entirety before the due date, you will not incur any interest charges and this way you receive ‘free credit’. The cost of money is expensive, and especially so now that there is a credit bureau. If you shirk your responsibility to pay up you may wreck your credit rating, and the ability to borrow for other big-ticket and often more important purchases, such as real estate.

If you can’t pay in full: At least pay the minimum balance and ensure that it is paid by the due date printed on the statement. This will greatly minimise the charges to your account and prevent the account from becoming overdue.

Here’s a tip from Scotiabank: If you have a tendency to run up credit card charges that exceed your cash flow, use your debit card when you would normally use your credit card. The money comes directly out of your account so you can’t use more than you have, and you limit your spending to what you can afford in cash. In other words, you live within your means.

Budget, Budget, Budget: Unlike cash, with a credit card you have a record of your transactions with your statement. Look at your major purchases during the month and use them to help you budget and balance your spending at the end of the month. You can see which items can be excluded from your spend list. Also you can check your transaction history for discrepancies and report any purchase with which you are unfamiliar.

Never take cash: Do not draw cash advances on your credit card. Setting up a personal line of credit is much more cost- effective because interest is charged on cash advances from the day of the advance and cash advances have no future financial value to you.