When you start to use your credit card you need to really think about how you are going to use it. One way is to use it responsibly and to make your payments each month and stay away from the dangerous interest charges that will otherwise be applied. If, however, you use it in the wrong way then you your card could become the highest interest loan that you will ever get.
![]("http://www.creditbuzzer.com/wp-content/uploads/2011/10/credit-card2.jpg")
If you are able to demonstrate some levels of self restraint and you use your card in the correct way you will certainly see some advantages. Such things might be the accumulation of air miles or purchase points through all of the different transactions you make with the cards. If you are using the card as a monthly interest free loan by paying off the balance each month then this can be a great advantage. However, for the majority, the cards represent far greater risk than reward.
What credit card companies want from you is to go down the irresponsible borrowing route. This way you will build up a mountain of debt that you are unable to pay off and as a result your interest rates will go up and it will take you longer to pay off your cards. This is the way the companies make their big profits. They lure you in with some great introductory offers, such as interest free purchase deals and then when the offers expire you will already be in a dangerous position where the debt is racking up.
By using the cards in the wrong way and falling into the traps laid out by the provider you may well end up seeing long term issues with your finances. By missing monthly payments, not only will you be charged with additional charges, but you will begin to generate a negative credit score. This is a serious issue as it can mean that you will find it difficult to find loans or mortgages in the future as financial institutions will be wary of your ability to pay them back.
Credit card providers will also hold you accountable if you have trouble making payments with your other debts. For example, if you are managing to stay up to date with your payments on your card but miss payments for another debt, then you may be liable to see a rise in your interest rates which can cause further problems.
In order to avoid these problems completely you simply need to ensure that you don’t let yourself get drawn in in the first place. If you do feel the need to get yourself a credit card, then make sure that you use it responsibly and have the money to be able to pay it off it needs be.
These are a few risks to look out for when using your credit card.
