The new credit card gives you buying power like you've never had before! Of course, you still can't afford those things in the ads. In fact, the more you buy on credit cards, the less you can afford! However, it is hard to imagine life without a credit card today.

Credit cards provide a convenient way to track expenses, and are essential for renting cars, reserving hotels, and such. Used properly, credit cards can be a valuable accounting tool. They are also valuable in emergency situations provided there is room under the approved amount to handle it.

The most common way people get into financial trouble with credit cards is they mistake the ability to buy something with the ability to afford it. They begin living as though the credit line is additional income, buying things like stereos, nights out, and vacations with the idea that only the minimum payment really needs to be made. Unfortunately, the additional income feeling disappears long before the minimum payments do.

The sad thing is that much of what people purchase on credit cards could still be financed with better products than credit cards by planning a little better. For example, it would be better to refinance a vehicle with equity to raise the money for some furniture or the vacation. Not only do you not incur an extra payment, but you get the benefit of the lower interest rate most institutions offer for secured loans. This will require full coverage insurance on the vehicle, but that is already in the budget if the vehicle is currently security on a loan.

Your spending habits and decisions will determine if the credit card helps fulfill your dreams, or if it will create the nightmare of financial ruin. It takes discipline to use credit cards wisely. It takes a lot more discipline to work out of the problems they can create!