Although traumatic life events can significantly increase the likelihood of an individual or couple filing for bankruptcy, the necessity or habit of running up unmanageable credit card debt for everyday expenses is another reality for too many American families.

Credit cards aren’t in and of themselves bad things. It’s how we use credit that can get us in trouble. Let’s take a step back to look at the most common ways people can accumulate consumer credit debt. There are three types of cards that we can use to take on debt.

Credit cards. When you use a credit card, the credit company approves you to BORROW up to a certain amount and charges you an interest fee for the privilege of using their money to make your purchase. There are two types of credit cards – bankcards and store cards. VISA and MasterCard are the most widely known bankcards. When you use those cards individual banks finance (loan) you the money to make the purchase and you repay the loan to the credit company. Store cards are credit cards issued by individual stores, like department stores. These cards typically carry a higher interest rate than bankcards.

Charge cards. The major difference between credit cards and charge cards is that unlike credit cards where you can carry a monthly balance subject to an interest fee, with a charge card you are required to pay the balance off in full every month. The most widely known charge card is American Express. Charge cards have no spending limit but they do carry an annual fee.

Debit cards. When you use a debit card it deducts the amount of purchases and withdrawals directly from your bank account. Think ATM cards. You can’t withdraw or purchase more than your account balance.

Because debit cards are limited to the amount of money in your account and charge cards require payment in full, credit cards are the real source of potential trouble.