Cut Costs With Cards That Pay You Back

One way to cut the cost of credit-card purchases is to keep your interest rate as low as possible. If your card company raises your rate, call customer service, advises Bill Hardekopf, of LowCards.com. "Tell the issuer, 'I need you to lower the rate or I'll leave.'"

With prices rising on many consumer staples, you can also beat inflation by selecting a credit card that complements your spending habits and rewards your purchases.

Keep a balance? Get a low-rate card. Iberia Bank, in Louisiana, offers a no-fee Visa card with a variable rate between 4.25% and 6.25%, depending on your creditworthiness. If you have excellent credit, you can apply for Pulaski Bank' fixed-rate 6.5% Visa card ($35 annual fee).

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Pay your bill in full? Earn cash rebates that go straight to the bottom line. Once a year you receive a credit on your statement that reduces your bill by the amount of your rebate. To find the best cash card, we assumed that you spend $2,600 a year on gas, $5,200 on groceries, $3,900 on eating out (including lunches), $500 at the drugstore, $4,300 on vacation travel, and $1,500 on gifts and miscellaneous expenses, for a total of $18,000. At that rate, using Blue Cash from American Express would cut your bill by more than $400. You earn 1% on everyday spending, including groceries, gas and drugstore purchases, and 0.5% on everything else, up to $6,500. After that, you receive 5% on everyday spending and 1.5% on everything else.

Want a break on high gas prices? Consider a gas-rebate card, such as the BP Visa. If you spend $4,000 a year on gas and $15,400 on everything else, you could lower your bill by $500. The card rebates 10% on BP gas purchases, 4% on airfare, dining, lodging and car rentals, and 2% on all other spending for the first two billing cycles. After that, the rebate is cut in half. To get a rebate on any brand of gas, select the Chase PerfectCard MasterCard. It pays a 6% gas rebate for the first 90 days, then 3% on gas and 1% on everything else. That would net you an annual refund of up to $302 on outlays of the same $4,000 for gas and $15,400 for all other purchases.

Like to earn airline miles? You earn one point for every dollar spent with the Simmons First Visa Platinum travel rewards card. It takes just 22,000 miles to earn a coach ticket worth $325 for anywhere in the 48 contiguous states and 50,000 miles for a ticket worth up to $1,000 for a flight to Europe. Blue Sky from American Express gives you a $100 credit for 7,500 miles.

Belong to a credit union? Check out special cards for credit-union members. Spend $18,000 yearly with the no-fee Visa Platinum Rewards card from the Pentagon Federal Credit Union and you'll get $362. The card offers a 2% rebate on groceries, 5% on gas and 1.25% on everything else.

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