Credit cards can be dangerous if you don’t understand them.

That’s why it’s crucial to learn how credit cards work before deciding whether or not to get one. Here are three important truths that everyone should know about credit cards.

Credit cards are NOT free money.

You read that correctly. Every time you make a purchase with your credit card, you’re actually borrowing money. Lenders want you to pay that money back—and then some. Using your card for purchases outside of your budget or to buy expensive toys beyond your means can result in a stunning level of debt. But that’s not all…

Credit card debt can take years to eliminate.

Credit cards are notorious for high interest rates, averaging 18.43% in the August of 2022.¹ That makes paying down credit card debt especially difficult. In fact, it might take years to pay off some cards if you made the minimum payments alone. Limiting your usage and paying your bill on time every month is an absolute must if you’re going to use a credit card.

Credit cards can be a great way to build credit.

But credit cards aren’t all bad! Consistently paying your bill on time and limiting your credit usage can indicate to future lenders that you ll be trustworthy with a loan. They may offer you more favorable interest rates and terms if you have a great credit score!

Credit card usage has the potential to make or break your financial wellness. Recognizing the risks—and benefits—that easily accessible credit can bring should inspire you to navigate your finances with care and intention.