by Anne Brodgesell

Created on: April 12, 2009   Last Updated: May 19, 2012

As hard as it is to believe that a small rectangle of plastic could ruin your life, simply having a credit card in your name could lead to severe financial strain or ruin. The current economic situation aside, lives have been ruined by credit cards since their inception.

Since the beginning of the 20th Century there have been store credit cards but it wasn't until 1950 that the first multi business credit card was created. The purpose of the card, called "Diner's Club" was to allow people to use one card at a variety of restaurants so they didn't have to always carry cash. By 1958 two more credit cards had been introduced, American Express and Bank Americard (now VISA). These cards were no longer limited to use at restaurants, they became universal multi-purpose cards.

Getting a credit card is easy. How often have you opened your mail to find a pre-approved credit card application just begging for submission? The types of credit cards are mind boggling:

Types of Credit Cards

Standard credit cards have a revolving balance to a certain credit limit, no annual fee, minimum payment and a finance charge applied to any outstanding balances.

Premium credit cards have an annual fee and generally offer some sort of incentive such as cash back, travel miles or other customer rewards.

Store specific credit cards are much like standard credit cards but can only be used in the specific store that issued it.

Credit Card Dangers

You can easily spend more than you make. If you don't keep track of your purchases or don't think of them in terms of money actually spent, it is easy to run up a credit card balance that you cannot possibly pay off. Unless you pay the entire balance of your credit card statement, interest starts to accrue. Interest rates on credit card balances are astronomical and soon you find yourself in a situation where even if you manage to pay off a portion of the balance of your card, the interest keeps mounting. In many cases, as you pay the balance down, you make other purchases on the credit card and the debt keeps piling up. Usually at this point, your credit card company will increase your credit limit. As long as you make the minimum monthly payments, you are a good customer and therefore deserving of higher credit. Experts agree that you should only put 10 – 15% of your monthly income (after deductions) against credit card debt.  You should figure out this amount before you even apply for a credit card and ask that the credit card company

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