Credit is very important but can be trouble if you cannot control it.

Credit is very important but can be trouble if you cannot control it.

For certain large purchases, for instance when buying a car or a house, credit is necessary. Financial institutions' interest rates vary.

They may offer specific benefits that could suit a particular need. The answer lies in shopping around and making an informed decision.

Try and avoid using credit on things that depreciate in value because you will end up paying more on the interest costs, especially now that the economy is not doing very well.

Purchases such as cars, televisions or computers are assets that do not increase in value. A car, particularly, depreciates in value the minute it is driven out of the showroom. Being aware of your real needs allows you to make a sober decision around its necessity.

Spending a little less on a similar item serving the same purpose could save you money in interest. The difference may be used to enhance your overall savings.

Always assess the necessity of the debt before you commit to it. Paying off the debt as soon as you can will help to minimise the overall cost and ensures the gradual accumulation of affordable assets