READ:ALL ABOUT PROBLEMS FACE CREDITS HOLDERS

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The average person doesn't open a credit card planning to abuse, misuse or lose it. A credit card offers more than just convenience, and it's a basic requirement for shopping, paying bills and building good credit. Understanding how people get into trouble with credit cards will help you avoid the pitfalls of plastic and keep your personal finances in good shape.

Overspending

It's much easier to make a discretionary purchase using a card than digging into your wallet and handing over your cash. It just doesn't seem like you're spending that much money sometimes or really depleting your bank account, and this mindset can lead to high balances. Overspending increases your interest payments, reducing your net worth. High balances also decrease your credit score. If you can't afford to pay cash for something -- and there will be times you can't – ask yourself whether you need to make that purchase. Overspending can lead to serious financial problems, including bankruptcy for more than 1.2 million individuals in 2012.

Late and Missed Payment Penalties

If you don’t pay your monthly card bill on time, you can lose a low interest rate, earn a penalty fee or ding your credit report if you let that payment slide long enough. Let’s say you transfer $2,500 to a card with 0 percent annual interest rate for 18 months. After six months, you miss a payment, losing your 0 percent APR and getting hit with a 20 percent interest rate on your remaining balance. That can cost you more than $400 in extra interest payments. Check your credit reports to see if anyone has reported you as a late payer -- if the information is inaccurate, follow the steps at the reporting agency’s website to get it removed.

Decreased Access to Credit

How you handle your credit cards can decrease your credit score, decreasing your ability to get a car loan, mortgage or even a job, based on some employers' requirements. Closing a card with a zero balance, for example, might seem like a good idea, but if it increases the ratio of your debt to your available credit, closing that card can actually lower your credit score. Applying for multiple cards and letting multiple lenders check your credit score can also lower your score, even if you don't accept or use the new card.

Fraud

Credit card holders are prime targets for petty criminals and cyber hackers. If they steal your card number, they can run up your balances, damage your credit and cause legal problems. Understand the terms of your cards and ask issuers what protection you have in the event someone steals your credit card information and makes fraudulent charges.