you also hearing Jennifer Garner, ask "what's in your

wallet?" Well, what's in your wallet is very important. And as

for all that credit card rewards talk, she might be on to

something.

Most people should be able to save at least a few hundred

dollars every year just by using the right credit cards.

If you travel as much as Peyton Manning or are a diehard Swifty

trying to save on those expensive concert tickets, as

these commercials will tell you, there's a card for everyone. And

those cards will save you money. Well, that is if you have the

funds to make the rewards worthwhile. They could

be really useful, or they could be dangerous. I think the

biggest tip is to know yourself.

Love them or hate them, those plastic or metal cards that can

instantly purchase anything from a coffee to a car are no

stranger to consumers, more than 80% of Americans own at least

one credit card. Every time you pay for something with a credit

card, you're borrowing money from the card issuer to cover

your purchase. While it might feel like it, it's certainly not

free, you then have to pay that money back either in full at the

end of the month or over time - with interest.

The average credit card charges about 20% interest these days.

So it is a very profitable business.

So first things first. If you're not in a place where you can pay

that money back by the time it's due, experts don't recommend you

have a credit card at all.

20% interest on a balance that you've accumulated and then you

pay interest on top of that. I mean, that's a really big hole

that you're continuing to dig and it's going to be really hard

to get out of if you don't pay your credit card balance.

Credit cards require approval. Once you're approved, the bank

authorizes a credit limit or the maximum amount of money you can

borrow. That depends on factors such as your income, your other

debts, and how much available credit you have on other cards.

But here's the caveat: whether or not you're approved depends

on your credit score. Meanwhile, your credit score is determined

by your credit report the information related to your

credit activity activity you might not have if you don't have

a credit card.

It's a catch 22. How do you build your credit history? Well,

the simplest thing is really to get a credit card, use your

credit card and pay it on time. Credit

scores generally range from 300 to 850. The higher the credit

score, the more responsible you're deemed. Credit scores not

only affect whether or not you get approved for credit cards,

but also your credit limit. And your interest rate on loans,

mortgages and the terms lenders may assign you. insurance

providers landlords and employers might also want to do

a check to determine your trustworthiness.

If your goals are to buy a house, get a car, get a loan.

The first thing that you need to do in order to build your credit

history is to get that credit card going.

Those Jennifer Garner commercials are for Capital One,

but there are numerous companies in the US that offer a wide

range of credit cards. There's the issuers American Express,

Discover Bank of America, Citi, Wells Fargo, and then there are

the networks. They facilitate transactions between the

merchants and the card issuers. The four major card networks are

Visa, MasterCard, American Express and Discover. Two of the

world's largest card networks, American Express and Discover,

are also card issuers. There are standard credit cards, rewards

cards, balance, transfer charge, student business secured limited

purpose prepaid cards, and the list goes on - different options

that may or may not be right for you depending on your personal

circumstances. Standard credit cards are the most traditional

type. They have an Annual Percentage Rate or APR, sign-up

bonuses, annual fees, late payment fees, balance transfer

fees, foreign transaction fees and the most exciting - rewards.

There's actually a whole industry dedicated to maximizing

credit card points and miles. Some people love it and they

love going down that rabbit hole and treating it like a game.

Bankrate.com Senior Analyst Ted Rossman earned more than $1,700

in rewards in 2022. But getting the most out of your credit

cards depends on your spending habits, which perks would save

you the most money. So how do you choose?

If your family spends a lot on groceries, get a card that gives

5% or 6% cash back on groceries, like that's a really nice

inflation buster right there. Maybe consider a second card

that's just a solid flat rate, something like 2% cash back on

everything. Most people should be able to get at least $200,

$300, $400 a year just by using the right cards.

Rossman says the rewards that get the most attention are often

travel related flights, hotels, rental cars, access to airport

lounges, free or discounted TSA PreCheck, priority passes,

Global Entry or clear to get you through those long airport

lines.

I think a really good strategy for a lot of people is one of

those transferable points cards, something like Chase Sapphire

Reserve or Amex platinum. Being able to transfer to different

airlines and hotels opens up a lot of options. The sort of next

level tip is within that - if you find partners of partners

like United's part of the Star Alliance and American as part of

one world.

Then there's rewards for dining, groceries, gas, and also

complimentary memberships and subscriptions. Big perks for

many are extended warranty and purchase protection.

A couple of years ago, I actually saved $300 on an Apple

watch repair, the credit card covered the replacement.

But according to Bankrate, Americans' favorite credit card

reward is cash back. Think especially

now with high inflation, I mean, who couldn't use more cash

right?

Whereas redeeming for merchandise will likely not get

you the most bang for your buck. Other rewards include sign-up

bonuses, fraud protection, and having the ability to invest

your money and take advantage of interest rates. Another thing to

consider is how much work you're willing to do. Are you that

person who's going to tape notes onto your cards to remind

yourself which should be used for different types of

purchases?

I know some people that have 30 or more credit cards, and they

have really good credit, and they get really good perks, and

they're constantly flying first class for free. Now that's not

for everybody. Of course, the average American has about four

credit cards. But even with four cards, sometimes there can be a

game element to this.

Having multiple cards and playing that rewards game can

get you some substantial sign-up bonuses, like the Capital One

Venture Rewards credit cards' 75,000 miles, or Ink Business

Unlimited's $900 in cash back.

If you are playing this rewards game, which a lot of people like

to do, because they like that upfront bonus, you're getting a

new credit card, and then you close it out, you're losing that

credit history. So my recommendation is not to do

that.

Only use a credit card if you can use it responsibly.

American credit card balances reached $986 billion in the last

three months of 2022. The big

fork in the road is whether or not you carry a balance. If you

pay your credit cards in full every month, then yeah, I think

you should use your credit card for everything because rewards

are great, they can really add up over time.

Even though it's simple math, a 2022 survey found that among

credit card holders who carry a balance, cash back was more than

four times as popular as a low interest rate. Meanwhile, a

large share of those who owe debt - 40% - don't even know the

interest rate for the primary card on which they owe money.

One of the biggest things that we see about the spending of

credit cards and those that are using it incorrectly are those

that are either from lower income households, those that

are uneducated in this because no one is talking to them about

money. A recent

Bankrate survey found that 30% of those without a high school

degree didn't redeem the rewards compared to 16% with a four-year

degree and the lower an American's income, the more

likely they were to let those rewards sit as well. More than

30% of those with annual household incomes below $50,000

left value on the table, compared to about 20% of those

with incomes between $50,000 and nearly $80,000. And just more

than 10% with incomes of $100,000 or more. SageMint

Wealth managing partner Anh Tran says culture plays a big part in

how people spend.

I grew up in an immigrant family, I wasn't taught about

personal finance, you just make as much money as you can and get

yourself out and build wealth for yourself.

Tran recommends having two credit cards and three if you're

a business owner: one for primary expenses, a second as a

backup, and a third to keep business expenses separate. She

says there should also be thought going into your credit

card limit and your spending ratio.

Let's say you have one credit card, and you've got a $10,000

limit on there, and you spent all the way up to $9,000. That

actually will lower your credit score because your

credit-to-debt ratio is not good because you've used up most of

your credit. So the rule of thumb is I would say try to

stick to around 30% and using what your credit availability

is. And so that's why having a second card will give you a

little bit of leeway and giving you more credit to spend.

For those with credit card debt while experts don't recommend

you open multiple credit cards and try to maximize your