5 credit card skills we wish we'd known

By Tim Sullivan

I'm lucky. I had older siblings who made mistakes with credit cards before I was old enough to get one. As a result, I got to learn from their financial slip-ups. But since some initial hiccups in college, all of us now have control of our credit.

We sat down to dinner recently and I asked them for five credit card habits they wish they had mastered earlier. Here's what they came up with:

1. Paying your balance in full every month

This should always be your first and foremost goal with your credit card. Effective credit card users don't carry a balance from month to month. In addition to raising your anxiety, not paying your balance in full means that the rewards that many credit cards offer will actually cost you money in the form of interest.

Instead of spending freely, create a budget and stick to it. Don't let unplanned purchases derail your spending plans, and don't waiver from paying your balance in full when the statement arrives. That minimum payment amount that appears on your bill can be tantalizing, but don't fall prey to it. Stick to paying your card to zero and sleep soundly instead.

2. Keeping tabs on your credit report

Smart credit card users check their credit report often. But while this is wise, it's far from normal. According to the a 2012 survey by National Foundation for Credit Counseling, nearly two in three adults haven't checked their credit score in the past 12 months. Not consulting your credit regularly leaves your records open to errors and even identity theft.

Our credit lives are primarily online today, which makes keeping track of your credit rating, accounts, interest rates and balances easier than ever. Create a spreadsheet with all your credit information and update it regularly, keeping tabs on how things are changing.

3. Managing your rewards card effectively

I love my rewards card. Whether it be for flights, hotels or cash back, getting paid to use a credit card is a beautiful thing that should be taken advantage of. However, I make sure to always prioritize habit #1 first when using my rewards card, knowing that carrying a balance can negate any gains I receive from my rewards.

4. Tracking your credit card spending

You should never be surprised by your credit card bill. These days, it's easy to check your balance online, so you should do so regularly and thoroughly. Not only will you find occasional errors (did you really tip $20 for that take-out burrito or was it $2?), but you will also get a better sense of where your money is going.

If you are a receipt-saver, great. If you like to log-on to your account website each day to see the previous day's purchases, great. The key is that you track your spending somehow and keep close tabs on your balance. There are lots of great tools to help track your spending as well, both on the web and for your smartphone, so have a look at these if you'd like to perform a deeper analysis.

5. Analyzing your credit card bills and disclosure statements

Not only can errors and fraud sometimes occur on your bill, but subtle fees can creep in as well. Read everything thoroughly and make sure you fully understand the terms of your card to prevent this. If a mysterious fee appears on your bill, call your credit card company to get to the bottom of it. Often, there will be a way to avoid this fee in the future, and the representative may even be willing to reverse your existing charge if you ask nicely.

I realize this wasn't the most thrilling dinner conversation for me and my siblings to have. But one of the reasons we're able to have a relaxed, anxiety-free dinner chat at all is because we have our credit lives in check. When the bill came, none of us felt a bit anxious to pull out our plastic.