John E. Pytte Nov. 21, 2016

credit cardCredit card advertising is everywhere, both online and off. Ads for cards show up on websites, in your email and in your mailbox at home. While having a credit card or two can be a sound financial strategy, many people fall into the trap of applying for and using bad credit cards. Using cards with unfavorable terms can rapidly increase your debt and make it difficult to get your finances under control.

Things to Watch Out For When Selecting a Credit Card

On the surface, bad credit cards don't stand out. They may be offered by well-known financial institutions or co-branded with respected charities and businesses. It's only when you look at the details of the card that you realize that this is a card that could cost you a significant amount of money.

Here are some things to look for:

High annual fees: Some credit cards charge users an annual fee. While this can be a reasonable practice, it can also become abusive. Carefully read any credit card offer to learn whether it charges a fee and how much you'll have to pay each year to use your card. There are many cards with no annual fee, this may be the first issue to look at. However, some benefits may outweigh the annual fee.

Nebulous benefits: Some credit card companies offer to sweeten the deal by offering various services and incentives. For example, a card may let you earn airline miles or points for hotel stays with each use. Other common benefits include price matching and discount travel booking. All of these services can be useful, but they don't always offset high interest rates or annual fees. Crunch some numbers before getting distracted by points programs.

High interest rates: High interest rates contribute to ballooning credit card debt and can make it nearly impossible to pay off a card if you can only afford minimum monthly payments. Check the interest rate on an offer and make sure to verify whether it is a promotional rate or a long-term one. Some credit card companies make special offers such as zero percent interest during the first six months of your card membership but then switch to a much higher rate after this time period has passed.

Balance transfer fees: Transferring a balance from a high-interest credit card to a card that charges lower interest can be a good debt management strategy. However, some cards charge additional transfer fees that can significantly eat into any savings.

Consumer Debt Mistakes

In addition to the problems associated with bad credit cards, there are other mistakes that people make when taking on consumer debt. Here are a few:

Relying on credit cards: Credit cards are a tool for helping you to manage your money. If you are using credit cards to buy things that you can't afford, you are at risk of running up balances that you will have difficulty paying later.

Carrying balances: Speaking of card balances, carrying a balance from month to month is the quickest way to grow your balance through interest charges. If you aren't paying off your balance each month, set a moratorium on spending and start working to pay down that debt.

Failing to monitor credit reports and scores: Everyone should regularly monitor their credit reports and scores. This lets you know how creditors perceive your ability to manage your finances. This practice can also alert you to errors on your report as well as possible identity theft.

Credit cards are a useful tool that can offset the risks of carrying and using cash while also helping consumers to build their credit scores. Understanding best credit card use practices, as well as the terms and conditions of your cards, can help you reap the benefits of cards while minimizing risks to your financial health.

If you are feeling uncomfortable with your financial obligations, we can help. Georgia Debt Relief has long experience in helping people like you with their debt issues. Contact one of our friendly, understanding staff and we’ll see what we can do to help.