Many people can remember the excitement of holding their first credit card. Many people can also remember the dread of holding their first credit card bill. It is important to be able to answer the question: How much debt is too much, and how much is OK?

The Emergency Credit Card

Before you apply for your first credit card, you need to know exactly how you plan to use it and what boundaries you are going to erect for your own financial safety. Many people only use their credit cards in an emergency.

The Debit Card-Credit Card

If you are looking to build a decent credit history, and you have stellar self-control, consider this option: Use your credit card the same way you would a debit card. Only spend money you already have, and only buy things you would have bought anyway. Most importantly, when the statement comes each month, pay the entire balance in full. Don't let anything carry over and start costing you interest.

No Credit?

Some people live a lifestyle of card freedom. They've sworn off credit entirely. Influential financial author Dave Ramsey teaches this method, and it is guaranteed to keep you out of trouble. Make sure you find alternative ways to build your credit history.

Good Debt

According to Eric Gelb, CEO of Gateway Financial Advisors, "Good debt is investment debt that creates value; for example, student loans, real-estate loans, home mortgages and business loans." This kind of debt is acceptable because you will earn more money long-term.

Bad Debt

Bad debt should be avoided at all costs. Bad debt is anything that makes you pay more for an object or service than what it's worth. A car is a good example. Your loan will increasingly gather more interest, meanwhile your car will decrease in value. This is not a smart financial decision. When you accumulate credit card debt, you often pay for one item several times over before you are finally back in the black.

Source:

MSN Money: Good Debt Vs. Bad Debt

MSN Money: 7 Fast Fixes For Your Credit Scores

Dave Ramsey: The Truth About Credit Card Debt

Resource:

Get Rich Slowly

Man Vs. Debt