How a Credit Card Can Badly Affect your Credit?
Cards can have rates of up to 25%, meaning for every $1,000 one has in card debt, he or she accrues an additional interest of $250 a year or more, depending on the way that compounds. This keeps card balances climbing, and pushes a customer even further into debt. Increasing balances can hurt one’s credit score because it lowers his or her credit utilization ratio.
Cards are Revolving Debt without Collateral
The nature of card debt itself makes it riskier from the viewpoint of the credit score formula. Since typical cards do not have collateral, banks do not have any other easy means to collect other than charging customers payments. Like a personal line of credit, it also does not require putting something up as collateral.