Credit cards are convenient, as you don't have to carry large sums of cash in order to make purchases. Credit cards have more security than cash, as anyone can use your cash, but using your credit card is more restrictive to authorized users (although credit card theft, identity theft, and unauthorized use of credit cards are becoming more prevalent than they have been in years past).

Credit card convenience extends to making purchases in stores, through mail, over phone, and even through Internet. Credit cards can not only be a convenient way to make purchases, select cards can also provide some great rewards, bonuses and points to user Rewards credit cards offer rewards, bonuses and benefits in way of discounts, special offers, limited sweepstakes opportunities, bonus points that can be exchanged for services or products, and free merchandise. These rewards and benefits can accumulate to credit card user, just by making purchases using their credit card (of course through using right credit card that offers reward/bonus/benefit).

Credit cards, stemming from their convenience, can also be a financial trap if not used wisely. The same “easy to use financial vehicle which allows for purchases to be made (shopping), essentially on a promise to pay at a later date”, has a couple of potential shortcomings. These shortcomings if not attended to, can lead to financial difficulty, and even contribute to potential financial ruin (bankruptcy).

The first shortcoming regarding using credit cards comes from convenience or ease at which purchases can be made. With credit cards, you can make purchases on credit, without actually having money to pay for goods or services. If purchases are made without money to pay for them, this can lead credit card user to overextend their ability to pay off credit card debt. Some people refer to this scenario as credit card abuse, where credit card user adds a lot of debt to their credit card, without ability to pay back debt in a reasonable time. The longer debt is outstanding and more difficult it is to pay back debt, more it can potentially affect one’s credit rating in a negative way as well as potentially make acquiring future credit more difficult. Check your credit report, to see what state your credit is in.

Secondly, when comparing loans of different lenders you need to thoroughly investigate and compare all loan features: maximum LTV, mortgage insurance payments (if any), credit and cash reserve requirements, qualifying ratios, etc. Pay special attention to presence of prepayment penalties and availability and terms of conversion options (such as rate reduction option, or option to convert an ARM to a fixed-rate mortgage).

Thirdly, for each loan you are comparing find out lock-in period, during which interest rate and points quoted to you will be guaranteed. Lock-ins of 30, 45 and 60 days are common. Some lenders may offer a lock-in for only a short period of time (15 days, for example). Usually, longer lock-in period, higher price of loan. The lock-in period should be long enough to allow for settlement before lock-in expires.