What Are Problems of Using Credit Cards?

Accumulating debt is one of the biggest problems with credit card use.credit cards image by Aleksandr Lobanov from Fotolia.com

Credit cards allow you to purchase things on credit and pay for them later. There are many advantages to using credit cards. For example, they allow you to purchase an item and make payments rather than paying in one lump sum, you can use them to make travel reservations and they can be useful in emergencies. Despite the benefits, there are also several problems with using credit cards.

Unmanageable Debt

One of the biggest problems with using credit cards is that it is easy to accumulate unmanageable debt. Credit cards are easy and convenient, so it requires discipline to keep track of your spending and make regular payments. In addition, if you do not have an emergency savings account and use only your credit card to pay for an emergency bill, it can plunge you quickly into out-of-control debt.

Credit card companies charge interest on unpaid balances. Often, a card will offer a low introductory rate that will increase after a certain amount of time. If you don't pay off your balance each month, you may find that you are paying more in interest than the items are worth. In addition, many credit cards will charge late fees and annual fees. These fees can add up very quickly, increasing the amount of debt.

If you do not use your cards wisely, it may negatively affect your credit report and score. This may happen in two ways. One way is if you make late payments or miss payments. The second is the amount of debt on the card. You do not want to "max out" or use all of your available credit.