It seems that everyone has a credit card these days. It’s so easy to pull out your card to buy whatever you want, isn’t it? The reality is a little different.

A credit card is a type of a loan. When you make a purchase using a credit card, the store or bank is lending you the money to buy that new shirt or television set. As with all loans, you will be expected to pay it back. In a few weeks when you receive your statement, you should try to pay it back in full right away.

Most credit card bills say on the bill that you can make a minimum payment. This is typically only a few dollars. If you don’t have much cash in the bank, that minimum payment may look quite tempting and affordable. Be warned though, this is the first step towards a downward spiral into debt.

When you only make a minimum payment on your credit card bill, a fee, called an interest rate, is added to the bill. This fee increases the amount that you originally paid for the product. 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.

So now they have several bills totaling a large amount of money that they can’t afford. Plus the credit card company is adding interest to all of the bills. 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.

We all need a little treat or a pick-me-up on occasion. Sometime this makes us feel better and sometimes it only fuels the fire for more spending. If the first purchase didn’t cheer you up, emptying your wallet to the last penny will only make your problems worse. It’s better to take a walk in the fresh air. 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.

If you must, use your credit card to buy what you can afford, and avoid the minimum payment trap. Be responsible about paying the bills when they come in, and don’t put it off if you can help it. 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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