Credit Cards - Learn to master your cards

There’s no escaping the fact that credit cards have revolutionised our spending habits over the last few decades or so. And there’s no escaping that credit cards have also been responsible for an ever increasing mountain of personal debt, which many people find it is increasingly difficult to escape from.

As is reflected through our ever-growing mountain of credit card debt, far too many of us simply view our credit cards as a means to purchase something that we don’t have the money for right now. While this in itself is poor financial management, the real disaster-in-waiting comes from the additional charges in interest and penalty fees that many credit card users incur.

Used correctly, a credit card can be a fantastic, convenient asset and even, in some cases, a life saver. Used incorrectly, through ignorance or through reckless abandon, credit cards can be a life wrecker.

Like with most aspects concerning your finances, it pays to have a rudimentary grasp of the mechanics of using a credit card, beyond the simple ‘buy and swipe’ mentality. What many people fail to remember when they use their credit card is that they are simply borrowing that money to make that particular purchase, and like all loans it will have to be repaid in full, and more often than not, with interest. Unlike a traditional loan however, where the repayment terms are normally spread out over a long period of time and the interest component is included from the start, a credit card offers an interest free period for a limited amount of time. After this time expires however, any outstanding monies owed will be charged at the going APR, and it is this APR (and any punitive charges for late payments) which more often than not consign credit card holders to spiralling debt problems. Making effective use of the interest free period however can actually put more money in your pocket over time, as we'll see later on.

Before we delve into the problems credit card holders can face, and the steps that they can take to get out of debt, let’s first look at the type of credit cards there are on the market and how you can use a credit card effectively and without paying interest.