Everyone has credit cards. When you see something that you want in a store, but don’t have the cash, just pull out a credit card and charge it, right? Well, not exactly.

When you use a credit card to buy something, for example a new television or a dress, the bank or store is actually lending you the money to make the purchase. In a few weeks they will send you a bill and you are expected to pay back the loan. The best thing to do at that point is pay the bill in full.

Your statement may say that there is a minimum payment you are required to pay, often a small percentage of the total amount. This may sound good if you don’t have enough money in the bank, but this is where your life in debt will begin.

If you only pay the minimum required, you will incur interest charges. This not only increases the original amount you paid for your purchase, it increases your minimum required payment. The trap of minimum payments is easy to fall into. It looks easy to pay back such a small amount, and it is tempting to make more purchases, assuming that the minimum payments will remain affordable.

This leads to people getting more credit or store cards, making more purchases than they need to, and ending up with several minimum payments that are no longer so affordable, not to mention the interest that is being added on each month. The longer the bill goes unpaid, the more you will pay in interest until you owe much more money than the products were ever worth. Imagine buying a product, using it until it’s worn and throwing it out. But because you’ve only made minimum payments, you are still paying for a product that you no longer own.

Often you just feel like splashing out a little, and that’s okay. If that leads to maxing out your credit cards, rather go for a jog round the block! If the jog doesn’t curb the urge to spend some money or treat yourself, look for sales and discounts, and buy something you’ll use!

Credit cards can be useful, but they must be used responsibly. Some people recommend keeping them for emergencies only, such as unforeseen car repairs, but generally you should only buy what you can afford to repay in the same month. Pay the bills as soon as they come in, preferably the whole amount due, not just the minimum payment, and you will be able to use your credit card responsibly without getting into trouble. If you see that your cash flow is going down, curb the spending. Remember that missing payments can affect your credit record and your ability to get credit when you really need it.

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