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The 10 credit card commandments: Follow them or fall into debt

There are few rules of the road when using credit cards: Call them the 10 Credit Card Commandments, if you will. When you follow them, you'll stay out of debt. When you break them, you run the risk of your debt situation getting terribly out of control. Here are 10 mistakes you need to avoid in this regard:

  1. Don't make minimum payments: You always want to pay in excess of your minimum payment or it will take years -- even decades -- to pay off your debt as it accrues massive amounts of interest.
  2. Don't pay late: Paying late will result in exorbitant fees and increases in your interest rates, causing your balance owed to skyrocket.
  3. Don't loan your credit card to a friend: If your friend needs to borrow money on your credit card, and you agree, go with him or her and use the card personally. Never trust your credit to another individual unless it's your spouse.
  4. Don't ignore your statements: Keep a close eye on your credit card statements so you know what your debt situation looks like.
  5. Don't let your credit card debt get sold to a debt collector: Make every effort to get current on your payments to prevent your debt being sold to a collection agency.
  6. Don't delay reporting your stolen or lost cards: Report your stolen and lost credit cards immediately to avoid identity theft.
  7. Don't max out your card: Maxing out your credit card will hurt your overall creditworthiness.
  8. Don't close your credit card because you're angry: This will not achieve anything except increase your credit utilization, which will hurt your creditworthiness.
  9. Don't apply to lots of cards at the same time: Credit reporting agencies will find this kind of behavior suspicious and it will hurt your creditworthiness.
  10. Don't ignore the terms of your credit card: Understand the interest rates and terms associated with your credit cards to avoid financial problems.

If you can follow the rules above, you'll decrease your chances of falling into debt. However, regardless how your current debt situation came about, you may want to investigate different ways of getting out of the problem. Depending on your situation, bankruptcy or other solutions could serve to improve your financial situation greatly.

Source: The Balance, "10 Worst Credit Card Mistakes You Could Make," Latoya Irby, accessed March 02, 2018

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