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People have come to rely on credit, with banks and financial institutions handing them out like candy during recent years. And unfortunately, it's easy to fall into the trap of whipping out your credit card to make a purchase without thinking through the implications of how that purchase is going to affect you in the long term.

Whilst it's definitely easier to carry a credit card rather than cash, it's also easier to fall into the trap of spending more than you have, thinking "I'll just pay it off at the end of the month". If, however, you're constantly doing this, by the end of the month, you've spent more than you've earned, and your credit card debt begins it's steep incline. Unless you write down every purchase that goes onto your credit card, chances are you'll have no idea how much you've spent until the credit card bill comes in. And by then, it's too late - you've already been using your purchases, and have little to no chance of returning any impulse buys.

That's not to say that having a credit card is wrong - it's the way that people misuse them that leads to financial debt. When used correctly, a credit card can actually help you budget, especially if you have a card that has an 'interest free' period (usually 55 days). The important thing is to only use the credit card for items you have actually budgeted for. If you're really controlled with your budgeting, you might even be able to put the money into a high interest savings account until the credit card bill is due, and earn a couple of dollars interest for yourself.

Sadly, very few people are that disciplined with their money, and instead they find their credit card debt mounting with every passing month. If that sounds familiar, it might be time to put the credit card away and swap to cash, or a debit card instead. When it's your money that you're spending, you tend to be far more economical with your purchases, and less likely to impulse buy, or buy items that are outside of your budget.

Whilst it's easy to dismiss credit card debt as unimportant, it can have a startling impact on your future. Get too far into debt, and you might find yourself without the money to cover even the minimum repayment, leaving you with a bad credit history which can follow you for years. It might also inhibit you from getting a home or car loan in the future, as a bank may see you as a financial risk.

Having a credit card may seem functional and economically sound, but in reality, unless you use a credit card as you would cash, you'll find yourself quickly falling into debt, with the interest quickly mounting.

Learn more about this author, Kris Zelunka.
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