Responsible credit card use is a good way to build and maintain good credit. However, there are potential risks that should be avoided. Unfortunately, it's all too easy to overuse credit or to mismanage payments. So, consumers should be aware of what can happen if credit is handled incorrectly.

New Credit Card Accounts are on the Rise

According to, data from the Federal Reserve Bank of New York shows that Americans are opening more credit card accounts. Apparently, at the end of June 2016, there were 440 million active credit card accounts in the U.S. And if this trend continues, there will be more people using credit cards than there were before the recession.

With so many people either using credit for the first time or expanding their available credit, now is a good time to talk about credit card risks. It's safe to say that most consumers apply for credit with the best of intentions. But the temptation to take on too much credit or overspend can be strong. This is why it's important to have all the facts before signing up for more plastic.

Credit Card Management

Don't Build up more Credit Card Debt than you can Afford to Pay Off

Every time you use a credit card, you're taking out a loan. So, it's very dangerous to think of your credit as "free money." If you max out a card and only chip away at the balance by making the minimum payment each month, you could run into problems.

Interest charges can mount up, and you can quickly get in over your head. With this in mind, you should only ever "borrow" from your credit card provider as much money as you can afford to pay back soon.


Don't Fail to make all of Your Payments on Time

If you're tardy with a payment, not only will you incur a late fee, but your credit score can also drop. In addition to these consequences, your interest rate might increase. Credit providers can report payments that are more than 30 days late to the three major credit bureaus.

If this happens, you could end up with a negative item on your credit report that will stay there for up to seven years. Need help remembering your due dates? Setting up automatic payments is a good way to always be on time.

Never Use More than 30% of Your Spending Limits

Even if you're making all of your payments on time, your credit score can still take a hit if you're using too much credit. In fact, your utilization rate is a strong factor in the calculation of your credit rating.

Why? If it looks like you are relying too much on credit cards, lenders may see you as a risky borrower. Most experts agree that keeping your utilization rate at 30% or less is a good practice. So, if you know that you're balances are too high, try to pay them down before charging anything else.

Think Twice before Applying for Additional Credit

Sometimes retailers will offer attractive promotions to customers who open a credit card account with them. And while these types of cards usually come with high APRs, they're not necessarily bad. It's just that it's smart to limit the number of credit cards in your wallet.

First of all, every time you apply for new credit, your credit report is subjected to a hard inquiry. This will cause your credit score to temporarily drop by a few points. Next, if you need to get approved for a loan, having an excessive amount of open credit card accounts might put up a red flag for a lender. Finally, the more accounts that you have, the more payments you'll need to keep up with. This can make it a lot easier to miss a payment or two.

Bad Credit Auto Loans made Easy

If you've had some trouble with credit cards in the past that caused damage to your credit, getting auto loan approval may not be easy. However, if you have bad credit and need to buy a car, Drivers Lane can help. We can match you with a dealership in your area that can work with your situation.You may even be able to purchase your vehicle with little or no money down.

You'll get a better chance at being able to finance your vehicle, and it won't cost you anything. The service that we provide is free of charge, and there are no obligations attached. So, go ahead and fill out our simple and secure online application to get started today.