Every time you apply for a credit card, your credit rating takes a hit. This is what people don’t tell you. You only have so much credit that creditors are willing to extend to you. Many is the person who has gone out in search of a mortgage, or a loan for a car, only to realize that their ten thousand dollar line of credit at Home Depot stands in the way. This is one of the most overlooked aspects of credit, and it hurts people all the time.

Don’t apply for credit you don’t need just because of a cheap introductory rate, or tales of financing. Get a bank loan if you must. You’ll find the interest rates lower, and the terms more reasonable. For that matter.

Don’t get store credit cards! People go applying for credit cards, and end up with a Sears credit card, or a Home Depot credit card. What people may not realize when they sign up for these, is that they carry an annual interest rate of up to 29 percent, and on occasion, higher! A simple renovation, costing a thousand dollars forgotten to be paid off by the end of the six month financing, can carry penalties carrying up to fifteen percent of what you paid in the first place, just in interest, which of course compounds over time, which leads me into the point of compounding interest and minimum payments.

They’ll get you, believe you me. Miss a payment, and it adds up quicker than you might realize, sapping your money away at an alarming rate. Find a nice low interest credit card, and stick with that one, paying off more than the minimum payment required on a regular basis. You barely pay the interest owed on the cards, otherwise, and you end up paying several times what the purchase was actually worth. You’ll be glad you when you don’t open your statement to find your five hundred dollar purchase has cost you over a thousand!

Credit cards are great in moderation, and used intelligently, but one must exercise caution, lest they fall into the trap of heavy debt. Especially in these uncertain economic times.