Credit cards are a useful financial tool when used wisely. They also are a way to financial disaster when used foolishly. Once you have a credit account you are on your way to establishing a credit history that will follow you around for life. The credit history will either be positive or negative and the status you hold determines many things including the rate of interest lenders will ask from you and whether or not you may be able to rent an apartment or land a job. Credit card use requires responsibility.

Many companies offer credit cards. Retail store credit accounts are revolving credit accounts where you receive a credit limit and are able to charge up to that amount. You are expected to make monthly payments on time and can continue to use the account as you wish up to the limit amount.

Banks and other financial institutions offer credit cards and may have better rates for good credit holders. They also offer first time credit applicants a way to obtain a secured card by placing a specific amount into a savings account that has a hold on it. For example, you put $300 in the savings account and get a credit card with a limit of $300. You can charge anywhere that accepts the card up to that amount and must make monthly payments. This is a revolving account where you can continue to keep using the card as long as you are under the limit. A secured card is one way for newcomers to credit to establish a credit history. Banks also offer unsecured credit cards for persons with established good credit records.

Credit cards are a convenient way to pay at many outlets and they make it easy to purchase expensive items but pay the items off over a period of time at the user’s discretion. Some offers perks for good payments and cash back or bonus items to card holders. Other offers include low or no interest rates for an introductory period. Some, like American Express, require high income and want the customer to pay in full every month.

Credit cards go bad when they are used for everyday items like groceries as users lack sufficient income to live as they wish. Debt accumulates; unpaid bills result in higher interest rates or default. Unpaid accounts get placed into collections and credit records show big negatives.

As most people will tell you, credit cards can be a useful tool that allows you to handle financial emergencies with greater ease than you would have normally. However, they can also ruin your credit score and wreck your financial future. Make sure that you have the money to pay the credit card off when you use it, and don't look at it as just "free money".

One good method of making sure not to use the card too often is to simply not carry your credit card in your wallet or purse. This way you have to plan ahead to have it available, and can't use it for spur-of-the-moment impulse purchases.

This article has been brought to you by Teach Me Finances, a personal finance blog dedicated to helping you learn how to handle your money better and more wisely. You can find more information on personal finance, investing, and insurance at their blog. Their latest article is information on eligibility for a Roth IRA.