Saving money and credit cards are words that typically don’t belong in the same sentence. For many of us, myself included, abusing credit cards has led to financial headaches. I, for example, found myself buried in nearly $20,000 of credit card debt soon after graduating college. I’ll never forget the fear I felt when opening credit card statements back then; it was a stark reminder that I was so broke it would take winning the lottery just to get back to even.

Eventually, I worked my way out of credit card debt. It took a lot of time and meant giving up on everything from eating out to travelling. But once I was in the clear, I learned how to turn credit cards from a financial black-hole into a tool to save money. Here’s how I learned to not only save money with credit cards, but also how to love them.

1.)  Balance Transfers: Back when I was in debt, I think I had close to a dozen credit cards. I would look at what I paid in interest when my statements arrived, but I never fully realized that my credit cards were costing me close to $300 in interest every month. Fortunately, I learned about 0% APR balance transfers (and later built this website to help others learn about them).

I used just about every balance transfer credit card I could get my hands on back then, though the fact is I misused them. The great thing about getting a 0% rate via a balance transfer is that interest expenses stop piling up. However, instead of using this opportunity to pay down my debt, I kept making minimum payments and spending the money I saved on interest.

Consequently, I now know that the key to using balance transfer credit cards to save money is to use 0% interest rate promotions as a tool to help pay off credit cards faster, not a means to delay interest expenses. If you have high rate debt, doing a balance transfer can save you $100, $150 or more on interest for every $1000 owed. The higher your current rate, the more you save.

However, in order to get the most value, use the money you save on interest to pay down balances so that when 0% rates expire, your debt is as close to zero as possible. (The fact that the best balance transfer credit cards offer rates lasting 15 months or more today makes this even easier.)

Learn about the Top 10 Balance Transfer Credit Cards in 2011

2.) Credit Card Rewards: Once credit card debt issues are resolved, many people disavow credit cards completely. For some, this may be necessary. For most, however, this is a mistake. If you can learn to use your credit card in the same way you use a debit card and pay your balances in full every month, then using a rewards credit card can save you a ton of money.

My family, for example, uses a mix of credit cards to generate savings. Because groceries are our largest expense, we use American Express Blue Cash Preferred. This card lets us earn 6% cash back at the grocery store. This particular card charges a $75 annual fee, but since we spend $800 or more on groceries every month, we earn $48 a month in rewards – $576 a year! – just by using this card and always paying our balance in full.

3.) Credit Card Promotions: Credit card companies have been increasing the incentives offered to new customers since the start of 2011 and, as I write this, there are absurdly good promotions available that offer new customers as much as $500 just for signing up and spending a certain amount of money on the card during the first three months of card-membership.

Currently, the Chase Sapphire Preferred $500 promotion is the best deal around. Not only is this the most lucrative offer on the market, it is also tied to one of the best rewards programs. A no annual fee version of Chase Sapphire with a $250 sign-up bonus isn’t too shabby either, nor is the Chase Freedom $200 cash back promotion.

Typically, I try to test out at least two cards every year to help me evaluate credit card companies so I can provide better reviews to my readers. I unfortunately signed up for Sapphire last year and, while I missed out on the massive sign up bonus, this a card my wife and I continue to use and it is a nice improvement from the card we had been using beforehand. Given how great these promotions are, it really makes sense to test these offers out. If you don’t like the card, you can close the account. But if you do, you not only reap a nice bonus, but also put yourself in a position to save more money with rewards in the long term.

Hopefully, once of the three ways I learned to save money with credit cards will be helpful to you. As someone who has gone from hating to loving credit cards, I fully understand how problematic credit cards can be. But I transformed my credit card habits and I firmly believe that with the right approach, credit cards can be a great friend rather than an horrific enemy.

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