It’s all too easy to rack up a ridiculous amount of debt if you are not careful. The credit card companies make money off of your spending and they want you to keep spending. That’s how the banks make their money and how you lose yours. In this article, I am going to discuss how you can avoid some of the most dangerous pitfalls in the financial world that a consumer will be faced with.

First and foremost, understand how a credit card and debit card are different and how they are the same. A credit card is used to make purchases on a borrowed dollar. You don’t have that money. Even if it is in your account the credit card is a way to spend credits that a bank is giving you. This is the reason that they keep sending you checks and offers of pay advances. They want you to buy big TVs and air hockey tables that you really can’t afford. You are then charged for this service through the interest on the card, the APR and any yearly fees that they decide to charge you. If you don’t need a credit card then you should establish one and never use it. Hide it in the bottom of your purse or the back of your wallet for dire emergencies.

A debit card is a bit different. This is tied directly to one of your accounts and draws money directly from said account. This is a better option than a credit card, simply because you don’t have to worry about interest. On the other hand, you still need to worry about overdraft fees. If you don’t know how much money you have in your account and decide to shop for air hockey tables, you may be in for a rude awakening when you find your account in the negatives.

These cards are both designed to make you spend money you may not otherwise spend. You didn’t need those air hockey tables, but you didn’t hand over any money so it didn’t feel like you were spending it. That’s good for the banks but, bad for you.

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