A credit card can spell instant money to a criminal - guard yours well

- Search: Credit cards

The British are addicted to credit cards, with an average of 4.1 cards for every adult in the country and record-breaking debt of £56.35 billion. If you'd like to know how not to get hooked - and what to do about it if you are - follow these five simple steps.

Credit cards are an essential part of modern life. They allow you to buy 'big ticket' items when you need them and help with budgeting by allowing you to spread payments out over time, but they are not free money.

Even the most generous, interest-free offer comes with a time limit and you can't keep transferring your balance from one lender to another indefinitely. It's better to choose the right card in the first place and manage your spending sensibly.

1. Check your credit report
This is your personal credit history, showing your loans, mortgages and cards, your repayment history and other information such as whether there are any court judgments against you.

Lenders see your report before they decide to offer you a card and what interest to charge, so you should ensure that it’s accurate and up to date. A single error could mean you don't get the deal you want.

To see your report for free, simply visit the Credit Report Centre

2. Get your finances straight
A credit card isn't a route out of financial trouble - it’s a useful way to manage your finances. Before you apply, it’s worth reviewing your current status on your credit report.

If you already have several cards, maybe a loan or two and a mortgage as well, lenders may think you are overstretched and turn down your request, restrict your spending limit or demand 'danger-money' levels of interest.

To improve your position, you could consolidate your most expensive debts into a cheaper loan, or pay off some of your outstanding card balances completely.

You’ll find lots more ideas and advice at Loans

3. Find the best deals
Interest-free deals don’t last for ever. Once they’re finished, you can pay anywhere between 5 and 70% interest on the amount outstanding on your credit card, so do your research.

Make sure that lenders do not interpret a request for information as an application for a card. This could make card issuers suspect you are desperate for money or even that a fraud is being planned.

You can double-check by looking at your credit report, which shows when lenders have searched your credit history. If they’ve misunderstood you, contact them, explain the circumstances and get them to remove the footprints from your credit report.

4. Set yourself a budget
Never take out a card simply to pay off another debt. Instead, work out how much you can afford to spend and what you can repay each month – and stick to it. It’s best to repay as much as possible, so you don't end up paying interest on interest.

Try not to spend up to your limit, either. You never know when you’ll need something for emergencies, such as a replacement cooker or a bargain holiday!

Missed payments will stay on your credit report for years and could harm your chances of getting finance that’s really important to you, including a mortgage, so it’s worth staying on top of your spending.

The basic rule is simple: if you think you may not be able to afford to service a card, don't get it.

To see where your money goes, try the Personal Budget Calculator

5. Guard your card
A credit card is instant money to a criminal. Even though the new chip and PIN system has slashed fraud on fake and stolen cards, crooks can still use your account data over the telephone and on the Internet.

If you throw your statements out with the rubbish, thieves can use the information to steal your identity, taking out more cards and other loans in your name - so always shred sensitive documents before binning them.

Look at your credit report regularly to check that you recognise all the loans and cards on it. With a credit monitoring service, you’ll be sent an alert if anything significant changes on your report, such as a new search by a lender. Double-check after receiving one of these and you’ll have peace of mind as well as a clean credit record.