Some people use credits cards wisely, some people seem to manage OK paying a little bit of interest per month and other have credit cards that are out of control and accrue large amounts of interest per month. If use effectively, credit cards can actually be a real asset.

The credit card market is a very competitive market, with lending institutions offering genuine benefits to attract and/or retain customers. If you're smart about your credit card usage, you can actually really benefit from the "add ons" that are on offer.

Annual fees

Most cards come with some form of annual maintenance fees attached. Some lenders waive the annual fee for the first 12 months and some actually provide a card without any annual fees. Chasing down a card without annual fees can save anywhere between $50 - $100 per annum - better in your pocket than the banks.

Additionally, the annual fee charged may depend on the services attached to your card. Reward points membership or improved card status such as Gold or Platinum usually comes at a cost so make sure you fully understand the cost and benefits before signing up! Some of the cards with better status provide free travel insurance for example.

Interest rates

Whether you're applying for a new credit card of reviewing your current credit card set-up, it's important to consider the interest rate that is being offered. Most lending institutions offer an initial interest period at a reduced rate i.e. 9.95% per annum for the first six month versus a normal rate of 15.95% which depending on how you manage your credit card balance, can add up.

Additionally, some lenders provide reduced rates for the life of card, which can add up to a lot depending on how you manage your card. Be aware, lower interest rates usually means less in the way of "add ons".

Have a look at the market and consider the options available and what best suits your needs.

Interest free period

All credit cards offer an interest free period. If you can manage to get an extra 5 or 10 days on your card, all the better.

Transfer of balances

Another way of attracting customers is to offer a reduced or 0% interest rate on balances transferred from another credit card. If you're struggling with your credit card and find you're paying large amounts of interest on the outstanding balance each month, it is worthwhile investigating the option of transferring the outstanding balance to a new credit card. This will allow you to pay down that balance whilst incurring little of no interest compared to incurred excess interest charges from your current provider.

Remember, the outstanding balance transferred to the new card should still be reduced as soon as possible. The longer it takes to reduce that balance, the longer you'll have outstanding balance accruing interest on the new card in relation to transactions processed using the new card.

Lenders will apply your repayments to the zero interest balance transferred before reducing any of the new interest bearing debt accrued by purchases with the new card. The longer it takes to pay of the transferred balance, the more interest you will pay on new transactions.

Reward points

Most credit cards have a rewards program attached to the spending. For instance, for every dollar you spent you be aware a reward point which can be redeemed to buy products, redeem as cash to reduce your outstanding balance or redeemed as frequent flyer points with a partner program.

Depending on your level of spending you can actually accrued a large level of reward points and enjoy the benefits on offer - products from the reward program, free flights when the airline partner etc.

Reward points = Frequent Flyer Points

A lot of credit cards are now directly aligned their reward points to airline partners so that dollars they can be redeemed as frequent flyer points. For example, I have an option with my American Express card that allows me to redeem my reward points as Qantas frequent flyer points. These points will be used to fund my next family holiday or help pay for accommodation or hire card.

Summary of key tips for using your credit card effectively

* No or low annual fee
* Low interest rate
* Extended interest free period
* Ability to transfer balance at 0%
* Solid rewards program aligned with your frequent flyer program

Have a look at your current credit cards and see whether you're getting what want. If the answer is no, get on line, check out the options and apply for the card that best suites your personal needs. It should be a pretty straightforward process and hopefully result in you saving some money.

For a couple of good credit card comparison sites, check out http://www.cannex.com.au or http://www.infochoice.com.au.

Remember, this is merely my personal option. If you're not sure what you're doing, speak to someone at the bank or lender of choice and make sure you're fully informed before making any decisions. If need be, consult a professional advisor before making a final informed decision.