The techniques described in this article only work if you are not in debt; if you are carrying balances on credit cards, pay them off – NOW. There is no investment that currently pays 12 to 21 percent you are paying out in credit card interest, so every month you carry a balance, your net worth decreases. That’s a pretty large sacrifice to make just to have an Xbox or to furnish your trophy home.

If you’re just starting out, here are things you can do to avoid debt trap, and use your credit cards to your advantage.

NEVER PAY AN ANNUAL FEE FOR YOUR CREDIT CARD Why should you pay $25.00 to $100.00 a year for privilege of paying a bank 18% interest? Shop for a credit card with no annual fees. Your credit limit may not be as high initially, but with a good payment record it will be raised annually.

ALWAYS CHOOSE CARDS THAT OFFER REAL CASH REBATES When I was a bookkeeper for a self-made millionaire, we tried to do business with companies offering discounts for paying bills on time. Many times, our invoices offered 1 to 5% discounts just for sending them a check within terms, and when you’re dealing with several thousand dollars per purchase, those discounts add up to real savings.

Payday loans is a some-what new multi-billion dollar industry in which people borrow money to tithe them over until their next payday. These loans also go by names cash advance loans and paycheck loans. They prey on lower class that find themselves short of money before a payday.

The one thing to consider when looking into a payday loan is APR or Annual Percentage Rate that these loans carry. At first glance, you may think paying $240.00 for a loan of $200.00 for two weeks is ok. The A.P.R of this loan comes to a whopping 520%. That is amount this loan would cost if played over a years time. Compare this with a high interest credit card of 29%. When you see it compared to these numbers, you can see they are not bargain you first thought it was.

A representative from a payday loan company has agreed to be interviewed for this article on condition his identity and that of his company be anonymous.

I asked him, how can they can justify such enormous interest charges. His reply was "Because we can. There are loopholes out there that allow us to do this. This is a high risk loan for most cases so we need to charge enough to cover bad loans and to make a profit."

When asked about if payday loans are ever a good idea, his response was "Sure. For example if you will be late on a credit card payment of $70.00 and will be charged a late fee of $30.00 then APR of payday loan justifies getting one. You will save points if you get a payday loan and not pay higher interest rate of late fee."

When you should get a payday loan:

There are times when payday loans are justified as discussed above. The primary example when your late fees are more expensive than late fees paid to your creditors.