Credit cards get a lot of bad press for good reason: They come with a lot of pitfalls that need to be avoided. But while avoiding credit card debt seems easy on the surface, it can be quite difficult.

The main problem is that credit card companies make their money when you make financial mistakes with your credit card and thus encourage you to fall into debt.

The other day, I gave you 10 reasons why you need credit cards. Today, here are 10 reasons why credit cards can be detrimental to your financial health, and why you may want to avoid them:

1. They can damage your credit score.
Your credit score determines a lot more than what interest rate your mortgage will be. It will affect how much you pay for insurance (if you have bad credit, you're more likely to commit fraud), if you can find a place to live (many apartment complexes check credit ratings to determine whether you are likely to pay your rent) and what jobs you can obtain (companies check credit reports to determine if you will be a good employee). If you accumulate credit card debt and lower your credit rating, you can expect to pay significantly more money than your friends who have good credit ratings.

2. They can come with universal default.
Universal default basically states that if you make a financial mistake somewhere and it gets onto your credit history, the credit card company has the right to raise your interest rate to its highest level. You read that correctly. It doesn't matter if the issue on the credit report has nothing to do with your credit cards. If you make a late payment on your garbage bill, your credit card rates may jump from their current rate to more than 30%.

3. They charge huge interest rates.
Most investors would jump at the opportunity to receive a guaranteed annualized return of 15%. Credit card companies charge interest rates on some cards that more than double that rate, and when you are borrowing money with double-digit interest rates, it isn't going to help your finances. Interest is wonderful when you are the one saving, but it's the enemy when you are the one paying.

4. They come with numerous fees.
While credit card companies make a lot of money on interest charges, they make nearly as much on fees. If you make a payment late, you can expect a hefty late fee. If you go over your card limit, you'll have another fee added to your bill. If you want a special-reward credit card, you may need to pay an annual fee. If you want to transfer a balance from one card to another, you can expect a balance transfer fee. If you use your credit card outside the U.S., you'll likely find a foreign-exchange fee. If you are not careful with your credit card, it's possible to pay more in fees than in interest.

5. Many cards have a hidden rule in the fine print.
If you actually read the fine print when you sign up for a credit card, you'd likely be surprised at how much the contract favors the credit company. The company makes the print small so that you don't feel like reading it, but it's in your best interest to do so. For example, that "fixed" interest rate card that you assume will stay at the same interest rate forever likely will not. The fine print will reveal that it's only fixed at that rate until the company gives you two weeks' notice that the rate will go up. You'll also find that you give up your right to take the credit card company to court for any dispute you may have. There are a lot of other similar examples hidden in that fine print.

6. They have deceiving minimum payments.
When a credit card bill comes and only a very small payment is needed, many assume that this means their overspending isn't that bad. This small payment, however, will cost you a lot of money in the long run. Credit cards set the minimum payments low to extend the loan as long as possible. This, in turn, means you pay more in interest. Minimum payments are often only 2% to 4% of what you really owe.

7. They encourage impulse purchases.
If you use only cash and don't have the cash to buy something, you can't purchase it. That puts a stop to impulse purchases. This is not true when you have a credit card in hand. When you make enough of those impulse purchases, credit card debt will follow.

8. They increase your spending.
Study after study shows that when you compare people shopping with cash and those shopping with a credit card, those with a credit card will spend more money. While this is good for the stores and for the credit card companies, it's probably not good for your bank account.

9. They encourage you to spend more money than you have.
The goal of the credit card company is to get you to spend more than you actually have, since this forces you to borrow money from the company at a high interest rate. The company will encourage you to splurge on gifts, vacations and anything else they believe you will want. It will also give you a credit card limit that will help you to go into debt. Unless you have the willpower to resist all its advertising, the company will get exactly what it wants.

10. Credit cards will bait and switch.
When you receive that preapproved 0% fixed-rate credit card application in the mail, you assume that when you fill out all the information, you will receive a 0% fixed-rate credit card. What may very well happen is that you will receive an alternative card that has a higher interest rate. Some credit card companies write in the fineprint that by filling out the application, you agree to take whichever of their credit cards they decide to send you and not specifically the one that they are advertising.

Credit cards can cause a huge amount of financial damage, so it's important that you understand how to avoid this damage before you apply for them. If you know that you won't be able to resist the temptation to use them unwisely, simply opt out of the system and don't get a credit card. Your finances will thank you for it.

Jeffrey Strain has been a freelance personal finance writer for the past 10 years helping people save money and get their finances in order. He currently owns and runs SavingAdvice.com.

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