Money: How to get the most out of credit cards

Five rules for getting the most out of your card (and paying as little as possible).

* Choose the right card in the first place (see "It's your turn..." below).

* Pay it off. In full. Every month. If you're the forgetful type, set up a direct debit to automatically pay the amount outstanding by the due date. If you want to use your card as a source of free credit, paying off part of the amount outstanding is not enough. That's because the interest-free days that cards offer apply only if you start the billing period with a clean slate. If you owe $2500, for example, and pay off $2400, you will still owe $100 at the start of the next period. Now, the interest-free days no longer apply - buy something with your card and you are paying interest on it from day one.

* If you can't pay off your card, at least make the minimum payment on time to avoid being hit with a late payment penalty. Even if it's only $10, it's still money down the drain.

* Except in emergencies, don't use the card for cash advances. Even if your card offers the standard maximum of 55 interest-free days, cash advances incur interest from the moment you receive the money. You may also have to pay a cash advance fee of anything up to $5 a time.

* If you get in a hole, stop digging. When the debt on your card just keeps growing, the first thing to do is to stop using it. If you haven't done so already, consider switching to a lower-interest card. Repay the debt as soon as you can. Set up an automatic payment to repay part of the amount owing every month. If you have a mortgage, consider increasing it to repay the card, to take advantage of the lower interest rates on mortgage borrowing. But resist the temptation to start running up the card debt again. And, when you are finally back in the black, ask whether you really need, or can cope with, a credit card. If you can't resist temptation, an Eftpos card will be safer.