Credit cards are a financial chainsaw - a very powerful and useful tool that can eviscerate you if not used properly. There is a golden rule for using them: ALWAYS PAY THE BILL IN FULL, EVERY MONTH, WITHOUT FAIL.
This is not a joke.
I mean it.
It is very tempting, when you get your first credit card, to spend lots of money on it. You can spend a month's salary, and when the bill comes you only have to pay an hour's wage. When you hit your credit limit, the card company will probably increase it for you with a single phone call or visit to their website. Brilliant, eh?
No. Elsewhere in these notes I will talk a lot about compound interest and how it will make you rich. Well it works in reverse - the credit card company will get richer at your expense if you carry a balance. You will get poorer at an even-faster-and-ever-increasing rate than compound interest makes you richer. You don't want that. Come and ask me if you want to work through some numbers to see just how bad it is.
I've been there and done this. Through my 20s I racked up debt on a credit card, bought movies and videogames and wine and so on. I imported consoles from Japan. I went skiing every year on the bank's dime. I bought fancy Lego Technic sets that I never built. Small things, but they all add up. I was lucky enough to catch myself before it got out of hand (total debt topped out at about half my annual salary at the time) and was lucky enough to be earning a decent salary that allowed me to make my payments without having to live on beans on toast for a decade. Not everyone is so lucky. It's far, far better never to dig yourself into a hole than it is to be good at climbing out of it.
Learn from my mistake. Always pay the full balance every month.
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