Posted on: Mar. 30, 2017 in Credit, Debt

Credit cards can be a very useful tool. When you’re low on funds and an emergency arises, they can see you through. If you need to make a large purchase and take a little time to pay it back, credit can certainly help. They’re necessary for many online transactions, booking flights, securing hotel rooms, and renting cars. You may be eligible for discounts and loyalty programs through certain cards with benefits. Credit cards can help you build a credit history that will give you access to a mortgage or an auto loan.


But they can also become a financial nightmare if you’re not careful. Of course, you could find yourself going through a rough time when you’ll need to carry a balance for a little while. This happens to even the most careful credit card users. But some habits are just plain bad, no matter how you look at them.

Here are a few ways to really get yourself into trouble with credit cards.

  • Carry a balance on high-interest cards. While this may be somewhat out of your control, you should always try to use the lowest-interest card available to you. You’ll also want to pay off as much as possible every month (paying it all off is best!) so as not to accrue interest charges. More debt will be added to your balance every day that you have one, so charges can build up fast.
  • Lack an emergency fund. When those rainy days happen – the car breaks down or the washing machine calls it quits – you’ll be tempted to pull out the credit card to solve the problem. When you have an emergency fund, you’ll be less likely to rely on credit to save you.
  • Charge more than you know you can pay off. Like we mentioned above, sometimes you need to use your card for an emergency and you know you’ll need time to pay it off. But if you’re consistently using your card and not paying it off, or you’re buying things you know you cannot afford, you’re setting yourself up for failure.
  • Pay only the minimum balance. If you look at your credit card statement, you’ll likely see an analysis of how long it will take you to pay the balance down if you only pay the minimum as well as if you pay more than the minimum. You’ll notice also that the amount you’ll pay in the long run will be substantially higher. As time goes by, you’ll continue to pay more and more in interest.
  • Miss payments. Making late payments or not paying at all will only hurt you. Between late fees, increased interest charges, and the growth of the principal you owed in the first place, your debt will mount. Your credit score will suffer and you’ll find it increasingly harder to dig out.

Credit cards are useful and can be a great financial tool to help you get the things you want and need in life. It’s important to use them carefully and wisely to get the full benefit and not get into trouble.

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