Tips For Staying Out Of Debt And Recovering When You Are In Debt

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Understand the simple steps you can take if staying out of debt is your goal. Find out what you can do if you have built up a debt to better manage it and reduce it more quickly.

Staying out of debt has become ever more relevant since the global economic crisis took hold. For many people, credit card debt has been a huge issue in their lives, especially when they have been forced to charge everyday expenses and bills to their account which they might have previously dealt with in cash or by direct debit.

First of all, let’s deal with how to best avoid credit card debt if you are lucky enough to not currently have any.

Staying out of debt

• Pay off your balance in full each month to avoid interest charges. This is key to staying out of debt. This will involve you knowing how much you can safely put on your card and still pay it off in full. You will need to be very aware of direct debits that will affect your monthly budget, cash spending, and also take into account any extra bills that arrive. You must leave enough money available that you will be able to cover your credit card debt.
• Make sure that any introductory balance transfer deals you accept are handled properly. This means not spending on a credit card that has a balance transfer amount on it to avoid the order of payments rule, and not being so blinded by an offer rate that you ignore the regular interest rate once it kicks in.

• Avoid cash advances on credit cards. These will join the back of the payments queue behind your purchases and any balance transfer amount. Cash advances are also charged at around 20%. Use a debit card for cash advances instead. Staying out of debt is easier if you do not use your credit card in the wrong ways.

If staying out of debt has proven impossible, here are a few tips to ease the burden and help restore your finances to a healthier state:

Getting out of debt

• Negotiate or find a low APR for your current debt. This will mean one of two things: Either you will have to call your provider and ask if they will lower your interest rate; or you will have to look for a new credit card that offers a good rate on balance transfers.

• To achieve the above, you will have to compare the market to discover the best deals. This is the information you will need to twist the arm of your current provider, or act upon to secure a new card if your provider is not too co-operative.

• Always try to pay more than the minimum amount requested. This reduces your debt more quickly and means less interest is charged. This can easily knocks hundreds of dollars off the overall amount you will end up paying.

• Always pay well within time to account for any delay in your payment being credited. You will most likely incur a fee if you go past the payment due date.

Whilst getting out of debt is you going on the offensive, your best bet is to play a defensive game, which means staying out of debt in the first place.

• Comparison of Top 10 Credit Card Offers

Editor's Choice: Our Top Credit Cards

Credit Card	Card Details	Interest Rate (p.a.)	Cash Advance Rate (p.a.)	Balance Transfer Rate (p.a.)	Annual fee	Interest free days (up to)
HSBC Credit Card	Editor's Choice: 0% for 6 months Balance Transfer & No Annual Fee Featuring a $0 annual fee for life, and 0% p.a. balance transfer for 6 months, the HSBC Credit Card was voted the Best Transactor Credit Card for 2010.	16.99%	20.75%	0% for 6 months	$0	55
Suncorp Clear Options Standard Visa Card	A great 12 month balance transfer offer, combined with a low annual fee and a good interest rate on purchases.	12.24%	17.99%	1.9% for 12 months	$39	0