A little over a month ago, I looked at our credit card system and wondered if it made any sense to optimize our credit card rewards. We “only” use two credit cards and so our system is dead simple. If I’m in a restaurant, use the Citi Forward. If I’m not, I use my Costco TrueEarnings Amex card (we also have a third card, a Capital One card, for international use but since our international travel is limited the card is shelved until we travel). I know plenty of people who have more than four cards and while I don’t share their love of optimization, or at least their adherence to it, I would optimize if it were simpler.

I see the optimization issue as having two parts – spending and paying. The spending part refers to the card you pull out at the store. The paying part refers to paying the bill when it’s due. There’s a new company out there that will help you with the spending part – they’re called Wallaby. They’re still in beta and while I signed up, I haven’t used it yet (or even seen it).

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One of the cool companies that I met at Fincon2012 was BillGuard. BillGuard analyzes your credit card transactions and tells you if they find anything deceptive or fraudulent. The beauty if their system is that they collect all this information and they can see trends – companies behaving badly, trying to sneak fees or other charges past you, or clever scammers and thieves stealing in a way your credit card company can’t detect.

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It’s no secret I’m a fan of Credit Karma, but I’m hardly alone in the world of personal finance bloggers. Plenty of people enjoy their service and part of the reason has to do with how they were first to market with a monitoring system. Since then, companies like Credit Sesame (also a great company with a great service, I recommend both) have also appeared offering scores and services from different bureaus, but Credit Karma was first – that’s probably why people always think of them first.

At a minimum, I use Credit Karma as part of my DIY identify theft protection system, but the service has plenty of other bells and whistles worth your attention. I thought I’d put together a few short videos (in shiny HD!) explaining how to use the other features of Credit Karma’s website. In this case, it’s their Score Center and their Report Card & Credit Simulator. Be sure to watch the videos in full screen HD if possible.

(it’s been a while since I did a video and I did these in one take… so be kind! )
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If you were in the market for a credit card before the Great Recession, you probably remember the rich rewards companies were offering for you to use their card. Credit was flowing freely and unless you were being paid a $100 gift card to sign up for a card, it probably wasn’t even worth your time! The 25,000 mile or $200 gift card promotions were there for the taking, especially if you had a good credit score. When the economic slowdown hit, those offers dried up. Credit card companies started closing accounts and it was rare to see a good offer unless you had a fantastic credit score. Credit card companies were playing defense.

Well, I don’t know if it’s a recovery based on the economic statistics, but the credit card companies must thinks so because the offers have been coming back in the last year or so. While you won’t see as many $200 or 25,000 frequent flyer mile promotions, they are certainly out there and it may be tempted to go on a signup spree to get all that free cash. I don’t think anyone, except the credit card companies, would begrudge you if you did!

It’s important to know what applying for credit cards, whether it’s one card or eight, will have a negative impact on your score.

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American Express is really amping up their promotions for their prepaid cards. Last month, they were offering a $10 bonus when you opened and loaded a card with $50. This month, they’re bumping it up to a $25 complimentary gift card when you load a card with $200 or more. The complimentary gift card is nominally higher ($25 instead of $10) but the amount you have to deposit is more. Instead of getting 20% of your loaded amount as a gift card, you’re only getting 12.5%. Still, it’s a return that trumps anything you can get elsewhere so if you have $200 and a desire to jump through a hoop or two, this could be a nice promotion for you.

I didn’t look that closely to the card the last time I wrote about the promotion but it’s has a few features I didn’t know prepaid cards offered. First off, the fact that there are no monthly/annual fees and purchase fees is something you won’t see from prepaid offers from some shadier places. Next, and this is the rare part, you get purchase protection, fraud protection, and even roadside assistance.

Promotion ends August 31st.

Terms & Conditions:
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A balance transfer is when you transfer your balance from one credit card to another, presumably to take advantage of lower rates. Some credit cards will write you a check for the amount, rather than having you jump through the hoops of paying another credit card company.

Why do credit cards offer balance transfers? Credit cards are in a constant battle to get a “share of your wallet.” They want to get into your wallet so that you’ll be more likely to use them when you make purchases, so all the cash back offers and reward programs exist to gain a piece of that share. They earn a percentage off each transaction, so having a large share is crucial to their business.

They have balance transfer offers because they know the longer you have the card, the more likely you are to use it. If you have a balance on your card, they’re playing the odds and thinking that you probably won’t be paying off that balance for a few months. Those are precious months they can sit in your wallet.

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By now, you are probably aware of how important your credit score is to your financial future. Knowing your credit score, and keeping up with your credit situation can help you save money in the long run, especially as you take steps to improve your situation.

One of the ways you can keep tabs on your general creditworthiness is by signing up for a web site like Credit Sesame. Credit Sesame offers you access to a general idea of your credit score — at least the Experian version of it — and provides you with information about how you can save money with different credit offers. Recently, Credit Sesame launched an online app designed to let you take advantage of Credit Sesame on the go.

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Credit cards are the prevalent form of payment in our country. However, in spite of their convenience, there are some drawbacks to credit cards. While some contend that credit cards are pure evil, the truth is that they are tools. Whether or not they are tools that are likely to work for you depends on your financial goals and you situation.

Before you make a decision about whether or not to get a credit card, it helps to consider your own financial situation, and decide which card is mostly likely to help you meet your goals (if any card can do that). Here are some of the pros and cons of credit cards:

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