It is an epic battle, one waged since the dawn of time…well not quite that long, but the battle between credit card rewards and credit card debt is one which polarizes people the world over.

But today we end it with a duel – en guard!

The Strengths of Knight Reward

Knight Reward is often accused of being an underhanded competitor – offering the possibility of the carrot, only to beat you with his stick.

Well you can avoid being beaten and get a hold of the prized carrot if you know how to play to the strengths of credit card rewards.

How to use a credit card for the rewards:

A rewards credit card must be used with a high interest savings account fighting alongside.

Knight Rewards’ most famous battle cry is the fact that credit cards can be used throughout the month, during their interest free days, for all purchases while your salary is in a high interest savings account accruing interest, or is in an offset account linked to your home loan, offsetting the interest you will have to pay on your mortgage in the month.

To be given the chance to win, your credit card must be allowed to fight, and to combat the high annual fees which often come with rewards credit cards, you will need to be spending at least $2,000 each month on your credit card before you consider going in to battle alongside Knight Rewards, to accumulate enough points to make you eligible for rewards which will compensate you for these fees.

You must always clean your sword before returning it to its sheath.

If you fail to pay your rewards credit card balance back to zero before the end of the interest free period, even the fearless Knight Rewards won’t be able to save you – you’ll be ensconced in interest and monthly repayments which will override the value of any rewards you may earn.

However, using a credit card and paying it down to zero each month gives you a strong credit report and shows your financial responsibility.

Choose a rewards credit card which actually allows you to earn rewards.

Some rewards credit cards are drawing you into a battle you’re bound to lose with unrealistic terms, conditions and usage periods for your rewards points.

However, there are many credit cards which will offer you the chance to choose gift vouchers or fuel vouchers with the points you have built up in your spending and some gold cards will also allow you to earn two points for every one dollar you spend.

Know the rules of the credit card battle.

If your rewards points do expire, make sure you can easily keep track of them and cash them in for rewards before you lose them. Also make sure that the rewards you can earn are ones you actually want, and that you are given choices between charity donations or cookbooks, movie tickets or a hair straightener.

A savvy purchaser can deftly avoid interchange fees. Some rewards credit cards will attract a higher interchange fee, but most Australian retailers will advise you of this additional fee before processing the purchase – therefore, look for a credit card with a companion card which attracts lower interchange fees.

For example, take a Mastercard or Visa into battle with a companion American Express card, AmEx can earn you higher rewards, while fighting in a tag team with Mastercard or Visa to avoid high interchange fees. An informed credit card user also knows interchange fees are just one of the many costs of doing business.

He’s put up a good fight, but is it enough to allow Knight Rewards to maintain his dominance on the credit card battlefield?

The Strengths of Challenger Avoid

Challenger Avoid is a somewhat meek competitor – taking the road of least resistance in the battle and in risking nothing, he attracts no ire.

Challenger Avoid knows his weaknesses and if you’ve identified similar weaknesses then you may choose to fight alongside the stoic warrior Avoid.

Avoiding credit card battles:

The cost of not-so-innocent interchange fees is just too high.

Avoid is proud to fight the good fight on behalf of all consumers and holds strong to his belief that interchange fees which merchants are charged to accept credit cards are a cost passed onto all buyers, regardless of their payment method.

Challenger Avoid will avoid credit card use to save himself from the costs of interchange fees, while hoping the decreased use of credit cards will decrease the cost of interchange fees to businesses, and in turn customers.

The battle of the credit cards preys on the weak.

Challenger Avoid chooses not to fall victim to the seemingly enticing deals which he believes are only a clever disguise to get him deeper into debt, in turn earning the credit card companies more interest.

Challenger Avoid knows the credit card companies don’t ever want him to pay off his balance, and chooses not to spend an eternity being encouraged to spend.

Know Your Credit Card Habits

Knowing your spending habits helps you responsibly avoid bad debt. If you have faced past battles with credit card debt and lost, or you don’t want to tempt yourself to spend money which is not yours, Avoid encourages you to not show your weakness to the credit card companies.

If you don’t think you can pay off your credit card to zero each month, or only use it for essential purchases, then the best way to ensure you stay debt free is to avoid the temptation to use credit.

A doppelganger debit card can give you the same convenience as credit. If you have chosen to avoid credit card use, you don’t have to forge the ease and security of paying with plastic.

You can instead employ a decoy – a debit card which looks and acts just like a credit card, but which links to your transaction account and allows you to only spend your own money.

Debit cards offer you the security to pay for bills over the phone or make online purchases and can even offer rewards of their own – Visa Debit cards for example give you first access to concert ticket releases and discounts on audio entertainment equipment.

A worthy opponent, who has now earned himself an equal rank beside Knight Rewards, but has Knight Avoid been able to topple his historic foe?

The battle has been fought and won, with each side offering a mighty show of strength and determination for their cause, with the duel making champions of both competitors.

How About You?

The duel between Knight Rewards and Knight Avoid will go down in history, so which side will you be fighting on in the future?

Fred Schebesta write for Credit Card Finder and Savings Account Finder, where he helps people to compare savings accounts and credit cards

Many times the simple things have a way of sticking with us and helping change our patterns of behavior better than a list of 25 items we need to remember to do on a regular basis. 

If you’re struggling with stopping the use of your credit cards - you could set fire to them, but I hate the smell of  buring plastic don’t you? 

Instead, try to focus on changing just one or two things.  Once you master those then you can move on to the next steps. 

I recently read an article from TheStreet.Com called 5 Ways to Dig Yourself Out of Credit Card Debt.  This post is adapted from that article. 

It will be especially important with Black Friday approaching that you have a plan in place to help with your credit cards.  Here are three simple things you can do to help curb your credit card usage:

1. Delete your cookies

Wait! What? Yes you read that right.  But how does that help? 

Cookies are simply a way your computer remembers information about you to make your internet browsing easier and quicker. 

One thing that your computer stores is your credit card account numbers and information. 

Think how easy is it to jump on a site like Amazon.com, shop for that new book, video game or software you’ve been dying to buy and with a couple clicks of a mouse have the item shipped to your house.

Most people aren’t big dorks like me and have their credit card number memorized  - so by deleting your cookies you at least have to take a few minutes to go dig your credit card out of your wallet and type in the information.

Doing this will probably get old after a while and hopefully will be enough to at least make you pause and think, “Do I really need this?” 

2. Apply the $25 rule

This rule simply says you CANNOT add more than $25 (or $50 or $15 or whatever you amount you decide) to a purchase you were originally going to make.

In other words, say you go to the mall for a new pair of pants, but you notice that sweater you’ve been eyeing for a while is on sale for $29.99.  You need to say, “Sorry sweater, you’re not coming home with me!”  Don’t act like you don’t talk to your clothes!

You should set your target spending amounts BEFORE you go to the store.

Another version of this would be to say you cannot add X amount to your card at any one time – where X is whatever amount you decide ($25, $50, $75 etc.)  This helps avoid those big ticket items that are easy to say to yourself, “Oh, I’ll just pay it off later!”

3. Play the Three Reasons game

This can be one of those games that annoy you to the point of not purchasing the item. 

Basically you need to name three reasons why you should buy that particular item with a credit card.    (Don’t cheat: ”Because I don’t have cash on me” is not an answer!).

If you have trouble with cards don’t fool yourself into thinking that getting your cards rewards points is an answer either.

If you can come up with three solid reasons why you should buy with your credit card then go for it.  What you’ll find is that many times it just doesn’t make sense. 

Try these simple rules this holiday season and see what happens with your credit card usage.  What other simple tricks do you use to help curb your credit card use?

Other posts on credit cards you might like:

• How to Save (Potentially) Thousands by Spending $3.99
• 9 Habits of the Debt-Free Credit Card User
• 5 Mistakes People Make with Their Credit Cards