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.

The bank or store that you got the card from is in effect giving you a loan. Each purchase you make with that card is bought with money you are borrowing from them. 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. Be very wary of those small minimum payments though. It may be more affordable to only pay that small amount, but this is often where people’s problems with credit card debt begins.

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 monimum required payment. This is where people start getting into trouble. It looks easy to repay, the minimum payments are affordable, and people are easily tempted into making more credit card purchases.

More cards mean more bills, with rising minimum payments and interest being added on until they are no longer quite so affordable. When people find they are unable to pay the monthly minimum, the credit card companies add more interest – every month. Eventually, you may still be paying for an item you purchased long after you’ve finished using it.

There are times when a treat can make you feel better, but if it leads to a spending spree you can’t afford, it is not worth it. Try a little fresh air or some exercise instead. Still, if you are determined to spend, there is a sensible way shop. Try to restrain your buying tendency except for sales and extreme discounts, and don’t over do it.

Credit cards are great when used responsibly. This means that you should only buy within reason, and what you can afford. When the bill comes in the mail, take it seriously. Sit down immediately, write a check, and pay off the bill. Do this every time you get a bill. When your bank account is getting low, cool down your spending habits. Your credit history and your financial security will be safer in the long run.

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