by Kevin Bradley

Created on: January 12, 2009

There are not many good things to be said about credit cards, but if used wisely, a credit card can be a good way to build up a solid credit history to enable you to get a good deal on a mortgage or loan from a bank. The problem is that too many people fall into the credit card trap and end up with high levels of debt that they struggle to repay.

There are certain things you should do and certain things you should never do when using a credit card wisely. It is best to start with the list of things that you should never do when using a credit card:

1. Never take out a cash advance.

It may seem obvious, but many people fall into the trap of taking out a cash advance on their credit card and end up repaying several times more money than they initially took out. This is all made possible by the way credit card debt repayment is structured. In general, when repaying debt on a credit card it is normally the cheapest debt that is repaid first. This ensures that more expensive debt, such as cash advances, is the last thing to be repaid and results in significantly more interest being paid while any balance remains outstanding on the card.

2. Don't fall into the trap of making the minimum repayment only.

The minimum repayment for credit cards is set up so that it earns the credit card company a large profit. If you only ever make the minimum repayment on a credit card it can take several years to be repaid. The wise thing to do is always repay your card in full if you can afford to. This will prevent any interest being charged and keep you in control of your finances. If you can't afford to repay your balance in full, then ensure you make repayments higher than the minimum requirement.

3. Don't use your credit card to make lavish purchases you can't afford.

If you can't repay the balance for purchases with 6 months or less then it is better to avoid making the purchase in the first place. Even over a period of 6 months, the credit card company will make money through their interest charges. Anything longer than 6 months is a sure sign that the credit card company will start to offer more incentives to get you spending as they aim to keep you perpetually indebted to them.

Having figured out what you should never do with a credit card, it is time to concentrate on what you should do to ensure you use a credit card wisely.

1. Always consider whether you can actually afford to make large purchases on your credit card.

There may be times when you are out shopping and an amazing bargain

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