Most of what people hear from financial experts about credit cards is negative, but credit cards can be a great tool when used wisely. Unfortunately, many people get in over their heads when they're just out of school and may never recover from the financial decisions they make unless they get serious about getting out of debt.

Staying Out of Trouble

A large percentage of credit card debt is incurred around the holidays. If you use your credit cards to do holiday shopping, you may not pay off the charges until months later. Using credit cards often leads to impulse spending and overspending, and those items that seemed like such bargains end up costing you 10 to 20 percent more than you thought, due to credit card interest.

If you can't afford to pay cash, can you really afford to buy the gift? There are times when incurring credit card debt makes sense, but holiday gift buying isn't one of them. Instead, try saving small amounts of money throughout the year in a special holiday gift fund. When the cash is gone, you're done shopping.

Some people use their credit card for nearly all of their expenses and pay off the balance in full at the end of the month. This gives them one document that includes most of their expenditures for the month and can help in budgeting and keeping track of where their money goes.

This practice is only for the most disciplined credit card users. If you don't have the money or the discipline to pay off your balance every month, you should avoid using a credit card for things such as clothing, food, gas, dining out, and similar expenses. Doing so can encourage you to spend more than you can really afford.

Cash Advances

Cash advances on a credit card come with a price tag — very high interest rates and fees. This feature is for the true emergency, not for buying non-essentials. If you're using cash advances for non-emergencies such as eating out, paying your regular bills, or entertainment or vacations, run to your nearest credit-counseling agency.

Grace periods don't apply to cash advances, so you pay interest from the day you get the cash. There's also usually a transaction fee of anywhere between 2 and 3 percent of the cash advance total. To add insult to injury, the interest rate on cash advances is significantly higher than the rate on purchases. All in all, your cash advance can end up costing you a bundle of money.

Correcting Credit Card Billing Errors

Review your credit card statement carefully each month, and if you see anything that doesn't look right, such as purchases you didn't make, incorrect payments or credits, or other errors, call the number on your statement for billing questions.

Sometimes a phone call can clear up the problem quickly, but if not, you have 60 days to notify the credit card company in writing. The credit card company has 30 days to respond and 90 days to resolve the error. In the meantime, you're not required to pay the disputed amount, and you won't incur any finance charges on the disputed amount while it's being investigated.