Let’s face it. Paying off a large amount on your high-interest credit card can prove a burden many of us are simply unable to deal with. With every passing month, that interest just gets higher and higher, proving a real headache to try and settle.

A way to get around the high monthly charges is to clear out the balance by getting a second loan that offers lower interest rates. Sure, it can get scary to pay off debt with more debt. In this case, however, it’s a sensible alternative that can save you thousands in the long run.

If you own a house, for instance, you can apply for a home equity loan. Instead of using the cash for your home, though, you can use it to pay off your credit card balance. Offering around 7% to 8% annual interests, they should prove a much cheaper alternative to your credit card’s 14% (or higher) APR. It can mean thousands of savings over several years - definitely a better deal for you.

What’s important to keep in mind, though, is to avoid using your credit card as if everything is normal once your balance is cleared. While it may feel like a great time to begin shopping again, remember that it’s the uncontrolled spending that got you in that position to begin with. Additionally, you’ll need that money to pay off the home equity loan. You’ll essentially be juggling loans to survive but if you do it right and refrain from touching the credit card in the meantime, it can mean finally being free from tremendous debt that feels like a mountain to climb.

Do you spend a lot of your money on gas and car maintenance? If you do, this credit card can help you earn cash rewards every time you fill that gas tank or bring your car to the shop.

Features

If you have good credit, getting a Discover Open Road Card will allow you to put all that work and expense on your cars to good use with 5% rebates on all gas and auto maintenance spending. Other purchases can get up to 1% rebates.

There are tricky, tiered rules on the gas and repair rebates, so it’s not all peachy for this card. For instance, you get the full 5% in rebates only until you go over $1200, at which time your rebates will drop to 0.25%. From $1500 to $3000, you’ll get a 0.5% rebate while anything over $3000 gets 1%.

For general expenses, you get a 0.25% rebate for purchases up to $1500, 0.5% between $1500 to $3000 and a full 1% for all expenses over $3000. If you exchange your rebates for gift certificates from participating merchants, you can get double its value.

It comes with free insurance benefits including travel accident, auto rental and credit card security. Unless you have a pristine credit record, though, you’re not gonna get the best APR they have available so expected it to be on the average (14% to 19%).

Should You Get This Card?

This card works best for those who plan to spend a maximum of $1200 annually on gas and car maintenance. Any more than that and the value isn’t really that great, with severely lowered rebates after that amount.

Traditionally, people used credit cards for store purchases. Increasingly, though, people are finding more and more ways to swipe that plastic and earn those reward points.

One practice that’s becoming increasingly popular is using credit cards in place of checks and cash to pay for rent and mortgages. With such a huge amount used from month to month, points are quickly earned that can be used to convert into miles for travel or various gifts.

It can sound like a smart idea. Instead of paying the rent with cash, you can charge the bill, earn the points and just send the money to the credit card company. You pay the same amount and get some extra perks along with it. No harm done, right?

Not exactly. If you don’t have existing charges and can clear out your balance month to month then it should be fine. Actually, it’s more than fine, it’s a better way to pay. Not only do you get the extra perks, you also get a 20-day grace period before shelling out for the rent with no interest involved.

If you have a balance floating, however, it can get you in more trouble than you anticipate. The new charges will tack on to your balance and just likely bring you into even more debt.

Furthermore, if you need to use your credit card to make house payments, it might be time to seriously consider your financial standing - you could be one emergency away from a serious crisis without knowing it.

Rewards credit cards are nice. At the same time you’re enjoying the convenience and benefits of credit card, you’re earning points that you can exchange for valuable products and services at a later time. For most consumers, however, rewards cards are usually just another credit card with higher fees that bring them no extra value whatsoever.

Problem # 1: High Fees

The chance to obtain rewards usually come at the expense of higher annual fees. While some rewards cards can come without them (like the Discover More card), most will have fees ranging from $50 to $100, with some (like the American Express Centurian) charging four-figure annual charges.

Problem # 2: Points Expire

Just because rewards are offered doesn’t mean you’re going to get them. If you only use your card occasionally, you will likely not reach minimum points required to redeem your rewards. Eventually, the points will expire.

Different rewards credit cards offer varying life spans for the points - some as short as three years while others for longer durations. Make sure your rewards card offer sufficient time before the points expire or you likely wouldn’t see any of it.

Additionally, points can be voided if you overcharge your credit or pay bills late.

Problem # 3: Redemption Can Be A Pain

Just because you have enough points doesn’t mean you will get your just rewards. For one, you will need to call the issuer every time you wish to redeem. Redemption terms can also be complicated, requiring you to do various things before being able to claim. Credit card issuers can also change the rewards’ terms any time they please, which could make you ineligible for one reason or another.

Problem # 4: Higher Spending

You will likely spend more with a rewards card than a regular card. The rewards are often too tempting a deal that you just end up using your card for purchases you can otherwise handle in cash. While this is not a problem when you pay off your balances month to month, it can prove a debt trap when you’re susceptible to mis-managing your finances every now and then.

Credit cards can offer some benefits that are usually listed as one-line fillers in many brochures. Things like car rental insurance, lost luggage assistance and various other perks are pimped as value-added features with nothing much to explain how they work.

If you’re interested in a credit card with car rental coverage built-in, you may want to call up the issuer and ask the following questions to make sure you know what you’re getting:

• What kind of coverage will you be entitled to? Liability insurance? What about personal collisions?
• How much liability is offered and what is the deductible?
• What are the exceptions that will allow the credit card company to deny my claim?
• What number should you call to report an accident? Who should you talk to? What is the process for filing a claim?
• What kinds of cars will be covered under the plan?
• Will it include coverage for international rentals?
• Who is allowed to be driving the car under coverage? Is it just cardholder or anyone else as long as the rental is in your name?

Clearing up these things can give you a better idea whether the bundled car rental perks are actually useful or just fodder to make the list of benefits look more attractive than it really is. If you frequently travel to nearby countries and get your rentals there, for instance, the benefit isn’t useful if they don’t allow for international driving. Don’t assume anything - always ask.

When you travel a lot, you probably know that insurance can add a lot to the final price of rental cars. Protecting both you and the rental company from possible accidents that can occur, it is an often indispensable part of travel. One way to save yourself from this extra expense is to use a credit card with rental car insurance built in.

Don’t assume, though, that just because car rental insurance is listed in your card’s list of perks, it will provide sufficient coverage all the time. Always check with your credit issuer what types of vehicles it can cover and whether it is primary or secondary. Beware, however, that majority of rental insurance bundled with credit card benefits won’t cover more expensive, luxury vehicles.

Additionally, the rental coverage on credit cards is only an available benefit and will not be activated until you call. Make sure to ask them to enable the feature before turning down the LDW (Loss Damage Waiver) and CDW (Collision Damage Waiver) usually offered at the car rental office.

Before traveling, it’s best to ask the credit card company to provide you a written copy of the policies governing the use of the insurance. This will give you something to refer to when you’re right there at the rental counter.

Should you get in an accident, inform your own insurance company, apart from the credit card issuer. In case the card refuses to pay for the damages, your own insurance will usually cover it.

If you want a better interest rate, sometimes, all you have to do is pick up the phone and ask for it. According to Consumer Reports, over 50% of people who call their credit card issuer to negotiate a better interest rate do so successfully. If you’re unhappy with your current APR, why not give the issuer a call and see if anything can be done.

Of course, if you’ve used your credit card delinquently over the last year or so, there’s little chance you’ll get it. There’s a perfect time to ask for a lowered rate (when your chances of getting approved are the highest), a good time (when you’ll get a fair chance) and a bad time (when nothing you say is likely to get it).

When is it actually a good time to ask for lower interest rates?

• You have no late payments and have stayed under your credit limit in the last 12 months. If you’ve paid your balance in full for several months, that’s even better.
• Average APR for most credit cards is 14%. If you are in the average range or higher, there’s a lot of room for getting it lowered.
• If you started out with a low rate and have had it increased several times for various reasons.
• If you’ve owned the same credit card for several years, have a good payment history and with your balance under 30% of your limit.

Your credit limit is an important feature on your card. Reaching over 50% of it, for instance, can get points deducted from your credit score - going over, even worse. Going over your limit will also get you additional charges (usually $39 a month every billing period that you’re over) and probably prompt the credit card company to raise your APR. If you have multiple cards, it’s normal for the other card companies to increase your APR with them as well when they see you spending too much with at least one of your accounts.

Here are a few tips regarding your credit limit and how to use it to ensure that your credit card experience stays a positive one.

1. Spend only a fraction of your credit limit. Your credit limit is not your spending limit, don’t ever think of it as that. If possible, keep it within reasonable levels (around 30% to 40%) - amounts you can pay off comfortably without going deep into debt.

2. Use your credit limit as a cushion for emergencies. Keeping a large-enough balance will allow you to save your credit limit for what it’s best used for - a financial buffer when you need liquid funds during unexpected circumstances.

3. Sign up for email alerts (most cards with online services provide this) when you reach certain milestones with your credit limit. Sometimes, you end up enjoying the cashless shopping too much and end up ignoring how much balance you’ve actually been using up.

4. Call your card issuer and ask them to disallow purchases that will put you over the credit limit. Most will be happy to oblige.

With so many people drowning in credit card debt, it’s easy to make an argument why you shouldn’t get one. However, they offer too much in terms of convenience and utility that not getting a credit card can prove more disadvantageous in the long run.

Credit cards are possibly the most convenient form of payment available that is accepted almost anywhere in the world. All you have to do is hand it over to the store attendant, sign your signature a couple of times and you’ll be fine. Online, all you have to do is type in your credit card’s details and the sales process is done - no fiddling with your bank account, no mailing checks and no getting money orders necessary.

You can travel to most urban (and some rural too) areas in the world and use your credit card with no problem. If you’re short on local currency, you can head on over to the nearest ATM and get a cash advance within seconds.

Even more reason to get a credit card - some services won’t deal with you without one. When you’re getting a car rental during holidays, for instance, you’ll be required to give your credit card details as insurance in case the hired vehicle gets damaged. Without one, few rental companies, if any, will serve you.

A credit card is also one of the first lines of credit you can get when you’re looking to build up your credit record. That, on its own, may be a relevant-enough reason to get one.

How many credit cards are too many?

It will depend on many factors, including your income level, credit history and other ongoing loans. Many financial advisors will tell you to keep just one or two - after all, unless you’re planning to carry pretty high balances, there’s really no point in having more than that.

American consumers, on average, have four credit cards each. A considerable number (14%) have over 10 cards each. How many do you have?

Too many cards can encourage unscrupulous spending simply by having the means to be able to do it. Credit cards can feel like cash once you’re in the store salivating at the thought of buying all sorts of stuff. As a result, buying what are otherwise unnecessary expenses can prove a little too hard to resist.

Keeping 10 credit cards also mean you’re paying annual fees ten times a year, apart from maintaining and tracking balances for ten credit cards. Cutting them down to one or two will not only eliminate those yearly charges but also save you some time by removing many card-related activities from your to-do list, from reading statements, paying balances monthly and regularly updating personal information.

When you’re cutting out credit cards, though, don’t rush into it and call up eight issuers at the same time. While you want to eliminate the temptation of extra credit, you don’t want your credit rating to suffer as a result.

Add up your total credit card limits and compare them to your existing credit balance. If cutting off one credit card will bring your balance to over 40% of your total line of credit, better wait until you pay it down further first. Cut down them one by one, ensuring that your balances, at the least, stay within 30% to 40% of your available limit.