Okay, I’m an oddball, but I’ve never been burned badly by the credit card traps. There are three that I know about.
ONE: The WAY to high interest rate. My credit card history is good. I don’t keep a large balance on them, but I’m still considerably over 20% in my interest rate. That’s steep. I can’t and don’t want to know what those numbers would be on a person with BAD credit history. Solution: Don’t spend money you don’t have and pay off your credit card every month. IF you cannot do this destroy your credit cards and live by cash. (Oh, and grow up.)
TWO: Late Payment fees and credit history dings. The late fees for even a few days are annoying. Missing payments also goes on your credit report–which is the data that banks use to offer you loans for homes, cars, etc. Solution: NEVER be late on a payment. Pay it on time in full each month. IF you cannot do this destroy your credit cards and live by cash and debit cards.
THREE: Spending more than you normally would. Most people will spend less if they use cash for everything. They start to be frugal since they see the dollars go bye-bye. But credit cards remove that from the equation so you spend more and save less. Solution: Develop a habit of frugal spending on every type of money–Cash, debit, credit, frequent-flyer miles, and Coke points. It’s is all money (which is only a means of exchange), so treat it with the attitude of frugal spending. IF you cannot do this, shread your credit cards and then purposely find the knowledge and maturity to grow into a responsible frugal spender and saver. I suggest Crown Financial Ministries, their website is Crown.org.
Anyway, I thought I’d throw this information out for you. I’ve escaped these traps and want you to as well.