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Avoid overwhelming credit card debt with proper usage

Many Tennessee residents try their hardest to get ahead financially, but are hampered by credit card debt. Many people have multiple credit cards and if each card carries a balance, a large percentage of their income goes toward minimum payments. Plus, it can be depressing for many people to know that they are still paying toward that high-ticket purchase they made many months ago, thanks to high interest rates.

The trick to avoiding credit card debt is to use credit cards wisely. Should a person use a credit card as often as he or she wants, as long as the balance is paid off in full each month? It may sound like a good idea - especially for someone who has a rewards card that promises cash back and other perks. However, what happens when the credit card bill is higher than expected?

The balance ends up getting higher and higher. The result? Balances in the four or five digits. How does one go about deciding what to charge and what to pay in cash?

A good rule is to pay for consumables in cash. This category includes groceries and gas. However, because credit cards are often more secure than debit cards, using credit cards may be a good idea in restaurants and for online shopping. Credit cards may also be useful for more costly but necessary purchases, such as furniture and appliances. However, it's best to set a goal, like aiming to have the card paid off in three months, and stick to it.

Although it's typically not a good idea for a person to charge what he or she cannot afford, using credit cards regularly and paying them off can help improve one's credit score. The trick is to not overdo it and to live within a budget.

Source: Consumer Affairs, "When to use a credit card and when not to," Mark Huffman, Sept. 19, 2013

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