The Easiest Way to Avoid the Dangers of Credit Cards

By Author on Jun 24, 2010 in Credit

These days it seems that we can’t live in the modern world without a credit card. Daily life and the internet in particular seem to require us to have a credit card in order to do many ordinary things. Unfortunately, credit cards seem to be the quickest route to financial disaster for many people. What then can we do to merge convenience with financial responsibility?

First, let’s discuss some of the points of credit cards. They are often hailed as a good way to build credit history and learn financial responsibility. That’s like saying that playing with hand grenades is a good way to learn about fire safety. It’s true that using the cards will improve your credit rating, but only if you use them responsibly. Otherwise they are the quickest way to ruin it.

Better ways to build credit include securing small loans from a bank or credit union. They usually charge very low interest rates and can’t be added to, making it more likely that you will honor the debt and improve your credit.

Even just a little trouble in paying your credit card payments can lead to big problems. Penalties and finance charges add up quickly and you can soon find yourself so far in debt that you have no hope of recovering. Hidden fees that you never even knew existed can creep up cause your balance to rise faster than you ever imagined. You are left with a destroyed credit history and an ulcer.

The easiest way to avoid the dangers of credit cards while enjoying most of the conveniences and benefits is to replace them with a debit card. A debit card is simply a type of charge card that is linked directly to your bank account. You can never overspend since you must have the money before you can spend it. Generally these cards can be used anywhere a credit card is accepted. Though there are a few exceptions. For example, hotels often place a hold on your card when you check in. You can avoid this hassle by assuring that you have sufficient funds in your account to cover the hold.

If you choose to use debit cards in favor of credit cards, make sure you do something to build your credit. Some day you will likely want to buy a home and a solid history of financial responsibility is a must. It’s just that credit cards are not the best way of building that history.

If you have already experienced problems with credit cards, it’s a good idea to check your credit report to see how bad the damage is. There are many sources that offer to provide you with your report for a modest fee. Stay away from them. There is no reason at all to pay for a credit report. By law, every American can request a credit report from each of the three major reporting agencies free of charge once each year.

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