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You really don’t want to work for 37.5 years to pay off a credit card debt. What you want to do instead is get those cards working for you. Here are some tips for doing this.
- Get a card with a great rewards program
- Limit the number of cards you have – when you have a wallet full of credit cards, it makes financial institutions nervous. The reason for this is that statistics show the more credit cards you have, the more likely it is that your spending will get out of control
- Don't get in the habit of making just the minimum monthly payments (' enough said?)
- Don't use credit cards to buy things you can't afford – use your card or cards to make only those purchases you can pay off at the end of the month to avoid falling into the interest trap
- Know the different types of credit cards – all credit cards are not created equal. There can be vast differences in their interest rates, their terms and conditions, annual fees and credit limits. Make sure you read the fine print before getting a new credit card so you will know you’re choosing the right one given your circumstances.
- Create a good credit history – if you use your credit cards sensibly, which generally means paying off your balances at the end of each month, you will be building a good credit history. Then when you truly need credit like for buying a new car you will have the credit available and that card will be a good friend.
Develop a strategy
It’s important to develop a credit card strategy. Are you using the card to build a good credit history or for maximum rewards? If it's to earn maximum rewards, choose a card that offers the best cash back, rewards or airline miles. However, be sure to remember that none of these rewards come unless you charge something on the card. Be careful to keep your spending in check, not let it spin out of control and, again, pay off your balance each month.