Renaud Laplanche is a financial professional with years of experience within the credit-card industry. Recently, he shared some of his observations and insights about how to use credit cards responsibly and thereby avoid getting into financial trouble because of them.

A slippery slope

Many people who have good jobs get in trouble because of how they use credit cards. Renaud Laplanche uses the real-life example of a woman who was working as a nurse when she had some unexpected car trouble, and found herself with a nearly $6,000 bill from her mechanic. To pay it off, she jumped at a credit card company offer to use their card interest-free as long as the debt was paid off entirely within six months.

It sounded good, but when she was unable to pay the balance by the deadline, the interest rate skyrocketed to nearly 30% retroactively from the day the card was used. In her case, this meant that she got another $800 added to her debt, and she was unable to do anything other than meet the minimum payments. To try and get out of the hole, she worked as an Uber driver outside of her regular job duties as a nurse.

How credit-card companies make money

Millions of Americans are locked into a cycle where they are unable to do more than meet the minimum payments on their credit card bills, and they are locked in a cycle that keeps them in debt and allows credit-card companies to earn money from interest payments. Part of the problem, according to Renaud Laplanche, is that credit card companies are sometimes deceptive in their advertising and simply tell people what they want to hear rather than accurately representing their services. On the bright side, there are many new and free online companies where consumers can check their credit score and generally stay informed and aware.

Bad incentives

Many companies offer points and rewards for buying extras, and this means that consumers are buying all sorts of stuff that they don’t really need. While there may be short-term gains from extra travel miles and so forth, the long-term result is that consumers have less disposable income overall than they would have had without all the seductive incentives. It’s a cultural problem, and it goes against the basic idea of thrift and penny-pinching most people are taught when they are young. Another problem is that people pay off one credit card with another one.

There’s hope

In the example Renaud Laplanche uses of the nurse who gets herself into debt, he points out that she eventually paid everything off. This came at the cost of moonlighting at a second job when she could have been spending quality time with her family. Many other Americans never get out of the vicious cycles of debt that they get into from reckless use of credit cards, and this behavior is encouraged by the credit card companies that profit from it.