Credit cards make modern life a lot more convenient. And they extend consumers' reach beyond the mere cash in their pockets.

But like most modern conveniences, they come with a price tag -- and for the unwary, that price tag can be very high.

For the smart consumer, though, there are ways to beat the system. In fact, if you are willing to expend a bit of effort and a lot of self-discipline, it is possible to have the use of a Visa or MasterCard at no cost other than the purchases you charge.

To do that, you need to get a card from a bank that charges no annual fee for the card and which allows you a reasonable "grace period" -- that is, doesn't start charging you interest for three weeks or so after you buy something, thereby giving you time to pay the bill without incurring any interest costs.

In addition -- and this is where the self-discipline comes in -- you need to pay off your balance in full each month. Do that on a no-fee, decent-grace-period card and you're getting a free ride on your plastic.

Even if you can't get your balance to zero each month, you still may be able to cut your costs. Interest rates on credit cards have a startling range -- from less than 10.5 percent to more than 20 percent. If you pay your balance off within the grace period each month, the interest rate on your card doesn't matter much. But if you carry a balance most of the time, check your rate; you may want to get a card from a different issuer.

The higher your balance, the more important the interest rate becomes. Bankcard Holders of America, a consumer group based here, calculates that if your average monthly balance is $750, you will pay $157 annually in interest charges if your rate is 21 percent, but only $90 if your rate is 12 percent.

To play this game you need a few facts.

First, you need to know that all credit cards are not the same. Only the bank credit cards allow you to shop around. Many retailers, notably department stores and oil companies, issue cards that resemble bank cards in that they offer "revolving credit." This means that you don't have to pay off the entire balance each month. But these retail and oil cards are generally good only at the issuer's outlets and the terms are whatever the issuer chooses to make them.

These terms aren't necessarily bad -- the cards usually have no fee, a reasonable grace period and a stiff interest rate -- but there's no getting around them. (Some oil companies are trying to peddle "premium" cards that do have fees, for which you get other services. But since most oil companies charge more for gasoline if you buy on credit, this adds up to paying a fee for the privilege of paying a higher price for the product. Make sure you really need those other services before signing up for one of these.)

Another class of plastic is the "travel and entertainment" card, such as American Express. These usually charge a fairly hefty fee -- $35 and up -- and give you about three weeks to pay. But these are not revolving credit cards, which means you are required to pay your balance in full each month.

Finally, there are two relatively new national revolving credit cards, American Express' Optima card and Sears' Discover card. They function like Visa and MasterCard, but because their terms are set by a single issuer there is no shopping for deals with them, either.

Altogether, according to Sen. Christopher J. Dodd (D-Conn.), chairman of the Senate consumer affairs subcommittee, more than 100 million Americans hold 731 million credit cards among them. According to Elgie Holstein of the Bankcard Holders, the average American has seven to nine credit cards, including two bank cards, so much of the bank card marketing is being directed "at the consumer who already has one or two cards."

So how do you find a cheap bank card? Both Bankcard Holders and Ram Research/Publishing Co. of Frederick have lists of low- or no-fee issuers and low-interest-rate issuers. Neither has turned up any Washington area banks that issue no-fee cards, but there is no reason not to do business with a bank in another state if it offers you a better deal.

A number of local institutions do appear on the lists of low-interest-rate issuers. Among them are Crestar, Chevy Chase Savings, United Virginia, Dominion Bank and several Richmond and Baltimore banks with rates under 15.15 percent.

You should check with the issuer to make sure of all its terms before applying, however. Some cards carry variable interest rates, while others have tiered rates, meaning that after a certain level of debt is reached a different interest rate applies.

It's also important to check the grace period. If you pay off your balance every month, you want a no-fee card, but you also want one with a 20- to 30-day grace period. It doesn't do much good to have a no-fee card that inflicts interest charges on you every time you use it.

Some of the very lowest-rate cards may be harder to get, according to Robert B. McKinley of Ram Research, and some may restrict you to a lower credit limit. Holstein of Bankcard Holders said that none of the banks on its lists have "extraordinary" requirements.

Bankcard Holders has two separate lists, for low-interest and no-fee issuers. They are available for $1.50 each from Bankcard Holders of America, 333 Pennsylvania Ave. SE, Washington 20003. The group also offers pamphlets on choosing a credit card.

Ram combines the lists, and theirs is free, but you should send a legal-size, stamped, self-addressed envelope. Their address is Ram Research, P.O. Box 1700, (College Estates), Frederick, Md. 21701.

And remember, no matter how cheap the credit, you have to pay the bill. So you should think long and hard about charging anything you couldn't pay for on the spot if you had to.

"Banks are no longer the tight-fisted arbiters of credit they once were," said Holstein. "This means the consumer in 1988 bears a greater responsibility than ever before for managing his own debt, and this includes credit cards. It's really up to the consumer to decide how much revolving credit is enough."