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There's a Debt Storm Brewing

The right credit card can help in this endeavor if used strategically, rather than as an excuse to overspend even more. If you have above-average credit, you can use the fact that issuers have been increasing steadily the value of their rewards to reach debt freedom faster.

  • Chase Sapphire Preferred Card: (JPM) Not only does this card waive its $95 annual fee during the first year, but it will also reward you with 40,000 bonus points for charging at least $3,000 during the first three months. You can redeem those points for a $400 check. But let's be clear, you should try to take advantage of this offer only if you would spend enough to qualify for the initial bonus anyway and you can truly afford to do so.
  • Blue Cash Preferred from American Express: (AXP) While this card does charge a $75 annual fee, it makes up for it with a $150 initial rewards bonus if you charge at least $1,000 during the first three months. This card's true value comes from its ability to help you save on major everyday expenses, with 6% cash back at supermarkets, 3% at gas stations and department stores and 1% everywhere else.

Other credit cards, when used as part of a well-thought-out payoff plan, can help you save time and money while working to get out of debt or finance necessary big-ticket purchases such as home improvements.

  • Slate Card from Chase: This card offers 0% interest on balances transferred from another credit card account and doesn't charge an annual fee or the 3% balance transfer fee that is standard with most balance transfer credit cards. The average indebted household -- which has a $6,600 balance -- would save nearly $1,800 on fees and finance charges as well as get out of debt nine months sooner by simply making $200 monthly payments to debt held on the Slate Card in place of a card with a 17% interest. You can leverage a credit card calculator to see how much you'd stand to save as well as develop a strategic payment plan that will enable you to pay off what you owe before regular rates take effect.
  • Citi Diamond Preferred: (C) While this card's 3% balance transfer fee makes it ill-suited to paying down existing debt, the fact that it offers the longest 0% introductory term on the market at 18 months makes it perfect for financing large expenses without wasting money on interest. Like with the Slate Card, using a credit card calculator to devise a debt payoff plan is essential to such a strategy. There won't always be another 0% card to fall back on, after all.

At the end of the day, these offers only make getting out of debt a bit easier. They're not the solution in and of themselves, so don't fret too much if you've missed a couple of payments in the past and have damaged credit. Just bear down and work to devalue the negative information in your credit reports with a monthly infusion of positive information from an account that you either make timely payments on or never use. It really doesn't matter as long as it doesn't charge an annual fee.

Staying out of debt is the real trick anyway. And while different people value different strategies for keeping their spending in track, isolating your debt on a separate account from your everyday spending is one trick you might want to try. You should always be able to pay for essentials such as gas and groceries within the month, so interest on your everyday account will be a clear red flag that you are overdoing things and need to cut back.

Odysseas Papadimitriou is CEO of the credit card comparison website CardHub and the new personal finance social network WalletHub.

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