Many debtors in Tennessee who are struggling to pay their bills cut their credit cards to avoid overspending. While this may seem like a smart way to avoid new debts, credit cards can be an asset for those trying to rebuild credit.

The key to not getting in trouble with credit card debt is to pay it off every month. If credit cards are not used for a long time, card issuers may close the accounts. This can hurt a person’s credit score, especially if the account was one of the cardholder’s oldest accounts. If a debtor must close credit card accounts, closing accounts that are newer may have the least damaging impact on the debtor’s credit score.

Not all credit cards are the same. Some credit card companies offer rewards in the form of cash back or points that can be used for airline tickets. Cash rewards can be used to offset some expenses.

Using credit cards wisely can help a person obtain better interest rates. However, all of the credit card bills must be paid on time. Being able to obtain credit when it is needed is essential for most people who do not have extra money to pay for large expenses like a home or car.

For those who want a financial fresh start, filing for Chapter 13 may be a good option. A Chapter 13 bankruptcy differs from a Chapter 7 bankruptcy because the debtor must make monthly payments under a court-approved plan that lasts for three or five years. After the debtor has successfully completed the plan, most remaining unsecured debt can be discharged.