However, it can be easy to mismanage your credit card, so here are some our 4 Tips for Avoiding Credit Card Debt, meaning that you can learn how to use your credit card to your advantage:

1: Pay off Your Balance in Full – Although this is often easier said than done, paying off your credit card balance in full every month makes financial sense. This way you can avoid having to pay interest on your purchases.

2: Check the APR – If you have a poor credit rating then chances are you will be paying more than the typical APR. Shop around and see which credit cards can offer you the best APR, so that if you cannot afford to pay off your balance then you will not be paying more than you need to.

This tip is particularly important if you have a store card, or are thinking about getting one. Store cards typically come with a higher APR than standard credit cards, so they are often always worth avoiding.

3: Check the APR, again – It is important that you understand the APR of your credit card. Most credit cards have two separate APRs – one for card purchases and one for cash advances.

One of the slippiest ways to end up in high levels of debt is to treat your credit card in the same way that you would your debit card, by drawing out cash from the hole in the wall. This is not recommend as the APR for cash advances is normally much higher than when paying with your card.

4: Check the APR one last time – You may find that you are tempted in by a low cost APR from your credit card company. But these introductory rates are only temporary, once it has expired then you are more likely to be hit with a higher APR.

However, if you are savvy with your credit card commitments then you might want to take advantage of the low-rates or 0% APR deals which are currently on the market. It is essential that you know how long the deal lasts and what the APR will be once the offer has expired.

Is it too late to avoid credit card debt?

It is easy for credit card spending to get out of control. If you find that it is a struggle to pay back your debts, it is important that you seek debt help as soon as possible. Credit card debt can be dealt with and Harrington Brooks can show you how.

Once you have been declared bankrupt, you will lose control of your assets, including your home. This is a serious situation; however, if you live with a spouse and/or children, you are given a twelve month period to make alternative living arrangements. But after twelve months, your property may be put up for sale. Another option is that if you own the property with someone else, they have the option of buying your interest in the property from the Trustee.

Another disadvantage with bankruptcy are the restrictions that will almost certainly be placed on you, not to mention the stigma that goes along with declaring yourself bankrupt.

These restrictions include:

• You cannot obtain credit of £250 or more alone or jointly with another person without disclosing your bankruptcy
• Conduct business in any other name other than that which you have been made bankrupt
• Be involved in promoting, forming or managing a company without the court’s permission
• Hold certain public offices

These constraints, however, will end once the bankrupt order is discharged.

On the other hand, you will be able to open a new bank account or building society account on condition that you disclose your bankruptcy status. The bank or building society will then place their own limitations and conditions. Overdraft facilities and cheque books may also not be obtained.

Not all personal belongings are claimed during bankruptcy. Items that you are allowed to keep include any tools, books, low value cars, items you may need in your employment or business, your clothing, bedding, furniture, and basic household items.

A bankruptcy order usually lasts for twelve months, but this does not necessarily mean that it is automatically discharged. Additionally, discharge may not necessarily free you from certain liabilities.

Even though a discharge releases you from most of the debt you owe, there are certain exceptions, including debt arising from fraud, certain crimes and fines. Debt from damages, personal injury or money owed under family proceedings like maintenance will only be released if the Court agrees.

When you are discharged, there may also be assets that have not been claimed, or that were obtained before discharge. These assets could include property, insurance or pension policy, or an interest in a will or trust fund. These assets are controlled by the Trustee, who can deal with them at any time in the future, which may take years after discharge.

There are also instances where a family member or friend can buy your interest in your property. Your Trustee will be able to give you more information regarding this. You need to disclose any assets that may have been acquired before you were discharged to your Trustee, as these assets could be claimed to pay your creditors. If you claim any assets after your discharge, you are usually allowed to keep it.

A typical Debt Management Plan allows you to consolidate all unsecured debts into a single and more affordable monthly repayment. This is then paid to your creditors on a pro rata basis over an agreed period of time.

• The amount you can afford to repay to your unsecured creditors is determined after deducting from your income
• The amount you have to your priority debts (i.e important commitments like mortgage, utilities and council tax)
• The cost of living (i.e. food, petrol, clothes etc)

This should ensure that that you do not get into arrears or even miss payments to your priority debts.

A Debt Management Company (DMC) will approach your creditors to advise your circumstances and highlight the advantages to them of accepting your pro rata payment offer. This will include requests to stop any interest and charges, and to not take any legal action against you.

Whilst it is unlikely that your creditors will take legal enforcement action against you while you maintain your debt management plan payments, the issue of freezing interest and charges is much more difficult, and can depend on your debt levels, how long you have had your debt and the identity of your creditors.

It is unlikely that your creditors would agree to the freezing of interest and charges immediately once you commence your plan, but we would expect to see some results after you have maintained your plan. Unfortunately nothing can be guaranteed.

This can often be the biggest drawback of a DMP. If your monthly payment net of fees does not exceed your monthly interest and charges, then your debt could increase in the short term. So whilst you benefit from a reduction in collections activity from your creditors, your debts can increase.

Even if this is the case, your Debt Management Plan may still be the best solution for you. Further borrowings may not be available to you, you may not be eligible for an IVA and you may have some equity in your home that you want to protect from the effect of bankruptcy. The issue is therefore, that whilst a DMP may not be perfect it is a demonstration to your creditors that you are serious about repaying your debts and you should consider your plan as a short term option.

If you are repaying more than then interest and charges and you are repaying to your debt, you will know how long it will take you to repay your debt in full. This allows you to consider DMP as a longer term solution.

Before settling on a DMP, consider these few factors

• Make sure that you use a fully licensed debt management company
• Ensure the DMC is ethical and has discussed all other options with you.
• Understand whether your DMP is a short or longer term solution.

This is why debt management companies exist. These companies can make your life that much easier, if the correct procedures are followed. So instead of borrowing from anyone who comes along you should sit down with a qualified consultant and decide on how to organise your debts.

They will ask you for some details and will do all the hard work for you – for a fee, of course. Do you feel too afraid to negotiate with your creditors? Debt management companies are expert at doing just that. They can knock off many hundreds of pounds on your debt and could even reduce the interest rate that you’ll be paying.

You’ll soon be able to live without worrying about harassing phone calls late at night. As long as you pay the monthly payment to the debt management provider your life will be in order. The company makes payments to your creditors and decide who gets how much.

But make sure that the debt management company is a good one. Do a check on them before you sign up so that you know they are credible.

Because of low savings, a minor financial change or setback could cause a consumer to spend unnecessary money and put themselves in more debt. Suddenly you start to only pay the minimum due on your credit card which, in the future, adds up to more debt in the form of interest.

But never fear. There is always ways to prevent such dire consequences as these, as long as you do some sensible financial planning. Firstly, start out with a monthly budget. If you are like most people, you probably don’t have a clue where your money goes every month. Getting to grips with your monthly spending is the first step to being financial stable.

When you try to dig yourself out of debt, it is important to put extra money towards your debt payments. The faster you pay off your debt, the sooner you can plan your financial future. A possible option would be to take on a part time job to earn extra money. Any extra money you earn should be used to pay off your debt.

Even if getting a second job is not possible, you can still pay off your debt. Contact your credit card company or bank and negotiate with them if there is a problem they can sort out for you. Credit card companies are usually very willing to help their customers pay off their balance; it is their money after all.

What many people don’t know is that many credit card companies are willing to offer you a lower interest rate, lower monthly payments, or even accept a lower percentage of what you owe. Don’t be embarrassed to ask your creditors for better rates. It will only help your situation.

If you feel you cannot negotiate with your creditors on your own, a qualified credit counsellor can be called upon to negotiate on your behalf. These credit counsellors are experts at negotiating with banks and credit card companies. They can negotiate excellent repayment terms, one that will suit your finances. But it is up to you to make the first step to digging yourself out of debt.