Credit cards are extremely convenient and useful part of our daily lives.  Even so, it is vital for cardholders to carefully manage its use and know exactly how much interest they are paying. 

A representative for Candidmoney.com, Justin Modray suggests consumers to pay off their credit card balances and soon as possible. 

Mondray explained, "Paying for a holiday by credit card carries the added benefit that purchases over £100 are covered by the 1974 Consumer Credit Act if you pay the supplier directly. However, credit cards are usually an expensive way to borrow money so try to avoid using cards for big purchases unless you plan to repay the bill shortly afterwards."

"For example, if you pay for a £500 holiday using an 18 per cent annual percentage rate credit card and then simply make minimum monthly payments thereafter, it could take over nine years to clear the debt and cost you £340 in interest.  Credit cards can be very useful when spending abroad as they save the need to carry lots of foreign currency. Just beware most card providers levy a currency charge of about 2.75 per cent on purchases and an extra two per cent for cash withdrawals."

Modray also recommended consumers study the terms and conditions of credit cards they plan to apply for as well as the conditions relevant to cards they already use.  He also said that most people apply for credit cards without properly reviewing the conditions of use. 

He commented, "I worry there's still a culture of chasing cards with high credit limits rather than a decent rate of interest. But fortunately there are some attractive credit card deals around and the internet makes it easier than ever to find them."

"Price comparison websites are often a good starting point, although beware they may give most prominence to the providers that pay them the highest commissions," he added. 

Because financial situations can change very quickly, managing debt levels should be everyone's number one priority. 

Mondray continued by saying, "As public spending cuts and higher taxes continue to take their toll, there's little doubt some families will increasingly struggle to balance their finances, but it's not all bad news."

"I think the likelihood of the Bank of England raising interest rates this year is slim, which means families with decent variable rate mortgages should continue to enjoy low monthly payments. However, the high rates of interest charged by many credit cards will persist, so managing expensive debt should really be the financial priority for most households."