Limitations

• A credit card seems boundless. If you have a $5 bill, you cannot spend more than $5. However, if you have a budget of $5 but are using a credit card, you have the option to make a last-minute decision to spend more than you have budgeted for. According to Dave Ramsey, "A study of credit card use at McDonald's found that people spent 47 percent more when using credit instead of cash."
  
  

Interest and Fees

• Interest on a credit card balance and any fees the bank charges are added to the balance and reduce the amount of credit available on the card. For example, Sue has a credit card with a $10 credit line. She spends $6 and still has $4 of credit available. Over time, she is charged $0.50 interest and is charged fees of $2.50 for paying her bill late. She now owes $9 and has only $1 of credit available. This is a simplistic example that illustrates the dynamic of one way people end up maxing out their cards.
  
  

Considerations

• Store and restaurant owners know how to make people spend money. They know that playing music makes people move more quickly and disturbs their ability to think clearly about purchasing decisions. The combination of a seemingly boundless credit card and an environment designed to encourage people to buy can be deadly for those attempting to keep to a budget.
  
  

Emergencies

• It is hard to save money. As savings accounts dwindle and stocks go down, more and more people rely upon credit cards to get them out of emergencies. For example, your car breaks down unexpectedly so you get it towed to the shop. You pay for the towing with a credit card, the repairs with a credit card, and the cost of a rental car in the meantime with a credit card. Relying on credit to cover unexpected expenses is a sure way to max out a credit card.