When they are used improperly, credit cards can encourage frivolous spending. The ability to “buy now, pay later” has led many individuals to financial ruin when they find that they have overspent their ability to pay. High interest rates and low monthly payments lead to credit card balances that can spiral out of control, until the credit card holder is forced to pay much, much more than the value of the original purchases. Unmanageable credit card debt can lead to grave financial difficulty, and even to bankruptcy. As a result, using credit cards for daily purchases and recreational shopping has become something of a taboo among much of the population.

Are Credit Cards Useful?
Despite these warnings, credit cards are only as dangerous as the people who use them. Many people use credit cards for small purchases, such as gasoline, and are diligent in paying off the balance each month. This practice can help build a good credit rating, demonstrating the cardholder ability to use credit wisely and pay it back on time. With a good credit rating thus earned, individuals are more likely to get good deals on loans when they need credit for large purchases such as houses and cars. Even for people who do not have any interest in developing their credit rating, however, there are good uses for credit cards. Read the rest of this entry »