A credit card is a crucial banking tool that could be both advantageous and dangerous, depending upon how you use it. Several new and young users of credit cards are excessively fascinated by credit cards because they see it as “free” money. Sadly, even many experienced users fall into the traps of credit cards. So, should you use it or not? Let’s find out.

Impacts of credit card debt
As a credit card user, you need to understand the impact of credit card debt. There are several dangers of credit cards. With a thorough understanding of these dangers, you can undoubtedly develop better habits and use a credit card more responsibly. Now, let’s understand a few risks that credit card debt might put you in.

There’s an itch to overspend
Many studies prove that when people have a credit card, they tend to spend more than what they would have, had they been paying via cash. Some studies even prove that at times, credit card users tend to spend twice as much as they would in case of cash spending. The primary reason for this is that credit cards are convenient and easy money. There’s no pain as such of cash going from the wallet.

• How can you avoid this?
  The best way to overcome the temptation of overspending is by putting a spending limit on your card. At all times, try to keep it lower than your credit card limit. It should be equivalent to the amount that you can pay off as your bill with ease. Do not try to overspend only to lead a lifestyle that you cannot afford. 

Interest adds up, and it gets harder for you to clear your dues
When you clear off the credit card balance in full every month, you do not have to bear an additional interest cost on it. However, if you do not pay the amount in full, there’ll be an additional amount levied as the interest payment, which will go on increasing every day you delay the payments.

• How can you avoid this?
  Always, clear off your dues in full. This is pivotal to ensure that you don’t have to pay any extra amount of interest in the spending that you do with your card. However, if you are unable to pay dues in full at any time, pay the maximum amount that is possible for you to pay off.   

Exposes you to a risk of landing in serious debt
Whenever you use a credit card, you are creating debt for yourself. So, if you borrow more than you repay, you get deeper into this debt situation. One dangerous impact of credit card debt is that it brings in an array of problems, besides the financial troubles, such as depression, anxiety, and other mental health issues.

• How can you avoid it?
  Always keep a check on the signs. If ever you are unable to clear your total dues in a particular month, cut down on your desires in the following month, and only try to live by the means.