Using credit can be easy and convenient, but only if you do it wisely. Credit plays an important role in your economic life. It gives you immediate buying power when you’re short on cash. It also makes it possible for you to pay for things you wouldn’t otherwise be able to afford. Credit not only helps you in real emergencies, but it can help you buy clothes, furnish an apartment, take out a car loan, or qualify for a mortgage.

The other side of credit is that you have to pay back the money you spend. It can be remarkably easy to lose track of how much you’ve charged until your credit card statement arrives. Worse yet, if you spend more than you can easily repay, you’ll owe finance charges and fees, not to mention the remainder of any unpaid balance. That makes your purchases more expensive.

More importantly, if you miss too many payments, you not only risk paying late fees, you may end up with a bad credit rating, which can make it difficult to get credit for larger items, such as a car or a house, later on.