How Credit Cards Help You Get Out Of Debt

Usually it’s irresponsible credit card usage that got  you into debt in the first place, but the very same credit cards can actually help you get out of debt too, if used wisely. Let me explain how.

Credit Scores

Interest rates are determined by your credit score. If you can get your score to go up your interest rates can decrease, saving you money. You can even refinance an old debt received at a high interest rate into a lower one if you’ve drastically increased your credit score.

Using a credit card is one of the best ways of increasing your credit score. As time goes by, if you continue using your card responsibly, your credit score will also continue to rise as well.

Another strategy is to apply for a new credit card (one with no annual fee). This card will come with a credit limit. Do not use this card, not now or ever. The only reason you got this card was to increase your overall credit limit. If you’re currently using 85% of your available credit your score will suffer from that. But by increasing your credit limit by opening a new credit card, you could lower that percentage down to 65% and up your credit score goes.

Rewards

Use a credit card that has a rewards program. Rather than paying for things in cash or check, pay everything on this credit card. Go further and even pay your monthly bills with your credit card. Doing this has two advantages. One, you will earn bonus points which you can later redeem for gift cards or an account credit. Two, you can track all of your expenses from one place so you can clearly see where your money is going every month. This makes it very easy to create a budget.

Zero Percent Interest

Credit cards want your debt. To get it, they will entice you with very appealing zero percent interest offers. This isn’t a scam. They are willing to let you go one full year without paying any interest, just your monthly payment. This is in the hope that you’ll still carry a balance at the end of the year and will begin to pay interest then. But you can game the system by paying off your credit card debt in full before the 12 month time frame expires.