In 2008, credit card delinquency rates in the United States hit a four-year high, according to Equifax, a credit card analysis firm. A few factors may have been responsible for pushing consumers over the edge, including the mortgage crunch, rising energy costs and a decreasing savings rate. In times of economic softness, people are often tempted to use their credit cards to see them through. This gets the bills paid, but there can be consequences to relying on credit card funding. Here we go over some of the major advantages and drawbacks of credit cards and show you how to use yours wisely.

The Unwelcome Truth about Credit
There are plenty of great reasons to use credit cards. Credit cards eliminate the need to carry large amounts of cash, and many of them offer excellent rewards programs, enabling card users to earn airline miles, cruise ship rewards and other perks by purchasing everyday items like gasoline and groceries. Discover Card, for example, offers one of the most well known "cash back" programs, enabling card users to get a discount on almost everything they buy. Credit cards are also great in an emergency - they make it easy to lay your hands on some quick cash and provide a convenient way to make unexpected purchases, although it's always a good idea to have emergency cash reserves. (To read more, see Build Yourself An Emergency Fund.)

However, the truth is that if you can't pay cash to make a purchase, you can't afford to make the purchase. Nobody likes to hear this, but it's the bottom line when it comes to credit cards. Far too often, credit cards are used as a financial crutch by people who want to buy things that they can't actually afford. Unfortunately, being able to make the payment isn't the same as being able to afford the purchase. If a spike in gas prices suddenly leaves credit card holders unable to meet their minimum payment obligations, then gas isn't the only thing these folks can't afford: all those other things they bought on their credit cards were beyond their means as well. (For more on this, check out The Beauty Of Budgeting and Seven Common Financial Mistakes.)