A credit card is simply one of many tools used for borrowing. The upside is that it offers convenience and flexibility when borrowing and can help you build a good credit history. The downside is that, when used improperly, it can lead to extra debt from View Details compounding interest and make it both more difficult and expensive to borrow in the future.
For example, if you bought a $1,000 item with your credit card and didn’t pay the balance in full within the grace period if any, you would owe that $1,000 plus interest. If your annual rate was 17.99%, you would owe $1,014.39.
If you didn’t pay the balance in full the next month, the interest would compound and you would owe $1,028.99. Clearly, you can see the debt beginning to pile up. Also, that's $28.99 that you need to pay towards debt instead of other things you might want.
Therefore, it's often best to wait to buy large, non-essential items when you have the cash on hand. Because interest compounds monthly on unpaid purchases and daily cash balances, you can wind up paying a lot more than the original price on those items.