How do credit cards work? Surprisingly, there are many people who don’t understand how credit cards work and how to use them responsibly.

I have heard so many false things and myths about credit cards even though they have been around for decades.

So today, I want to clear everything up for anyone who has ever asked the question, “how do credit cards work?”

When you know how they work and use them responsibly, there are some great benefits of having credit cards — a higher credit score, cash back, airline miles, rewards, etc.

Those benefits are why I love using credit cards, but I understand that they aren’t for everyone.

A family member of mine once struggled with credit cards, and they found that using a cash only budget was the best way to stay out of credit card debt. Fortunately for them, they were able to recognize their credit card mistakes and found a way to make sure they weren't adding any debt. Part of that was being proactive and noticing that they had an issue early on.

However, others are not as lucky.

I’ve heard many stories about people who continue struggling with credit cards and keep adding to their debt. And I’m always shocked when I find out it’s simply because they don’t understand how credit cards work. [Read more…]