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Credit Cards: How to Stay Out of Debt

Credit card advertisements are alluring. Whether creditors are enticing you with airline miles, free hotel stays, or cash back rewards, it almost seems like it pays to charge. But too many people realize too late that a few airline miles, the random hotel stay, and the few dollars they get back each year aren't enough compensation for the massive amount of debt they've now gotten themselves into.

It's easy to charge. You get your total, pull out some plastic, sign the receipt, and don't think about it again until your bill comes in at the end of the month. That's when you realize just how much you've been spending, how much you need to pay to avoid a late charge, and how much interest you've racked up. Unfortunately, this situation is all too common for many credit card users. However, you can use credit cards and not fall into massive amounts of debt. It just takes some research and careful planning to use your card wisely.

Use an Interest Free Card

Many credit card companies now offer interest free credit cards, but you must be able to pay off the total amount each month in order to keep it interest free. This means that you can't charge more than you're able to pay when the bill arrives. The minute you pay only the minimum amount, you'll be charged interest and usually at the highest rate. But an interest free card is a great way to save money and still be able to make charge purchases.

Have One Emergency Card

We all come upon emergencies that require quick cash. You get a flat tire, you end up in the hospital, or your roof needs replaced quickly. Not everyone can come up with the cash needed right away. If you have an emergency card that you only pull out when you need quick cash, you can avoid staying out of debt. Just make sure that you start saving extra money to pay the card off. Even if you can't make the full payment at once, by making more than the minimum payment you'll pay it off quickly.

Use a Card that Tracks Your Debt

When you fail to pay your credit card bills and end up filing for bankruptcy or use a debt consolidation service, the creditor ends up losing money. To avoid this, some creditors are now providing customers with a type of debt tracker that comes with their bill. The company will actually show you on your bill how much you owe, how long it will take you to pay off the bill if you only make the minimum payment, and how much you'll actually pay in the long run by only making minimum payments.

It gives you a clearer picture of what you're actually spending when you only make small payments. You're more likely to try and pay off your credit card if you see that your $150 bill will end up costing you over $200 if you only make minimum payments. Simply put, to avoid credit card debt you should avoid credit cards, but if you need some plastic in your life try to pay off the bill each month and don't get sucked into rewards programs on high interest cards.

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