Credit card debt is the third largest source of household debt, behind only mortgages and student loans. According to Equifax, the average credit card balance is about $1,244 per card.

“Credit cards are a significant source of debt for millions of Americans, and that’s why it’s so important to develop the knowledge and skills to manage them effectively”, says Steve Trumble, President and CEO of American Consumer Credit Counseling (ACCC). “In today’s fast paced world, consumers need to be more credit card smart than ever before”.

Get smart when it comes to using credit with these tips from the ACCC.

  1. Understand your credit card and any fees associated with it. It’s important to do your research to find the best deals and interest rates. Understand your annual percentage rate (APR) and how it is calculated by your provider. It can make a difference in how much you pay each month. In addition, be aware of any fees associated with your card, as thee hidden costs can add up.
  2. Pay on time. Problems can escalate quickly for your wallet if you miss a payment. Missing payments can lead to late feeds and higher interest rates and can even cause a drop in your credit score. It’s worth contacting your credit card company to request that the late fee be waived if you have a good reason for missing the payment.
  3. Don’t get hooked on minimum payments. If you only pay the minimum on your bill, it can take a long time and a lot of extra money to pay off your debt. For example, if you owe $5,000 on an account with an 18 percent APR and pay a minimum of 2 percent of the balance, it will take more than 7.5 years to pay it off. Just as bad, you will have paid $4,311.25 in interest. Paying even a little more each month can substantially reduce the time it takes to pay off the debt and decrease interest.
  4. Avoid Special Services, programs and goods that credit card lenders offer with their cards. Most of these are extras- items such as fraud protection plans, credit record protection, travel clubs and life insurance. More often than not, much better deals on these services can be found elsewhere.
  5. Never max out your card. You will be hit with over-limit fees. Keep in mind that it’s best to use only 30 percent of your maximum credit allowed. Using more than that can cause a drop in your credit score. In addition, be aware of unsolicited increases to your credit limit.

This information is especially important to keep in mind if you intend to buy a home in the near future. Lenders certainly will consider your credit score, debt and payment history before approving a mortgage.