What is one risk associated with relying solely on credit for purchases?

Relying solely on credit for purchases significantly increases the risk of incurring high interest payments over time. When you make purchases on credit, you often borrow money from a lender, such as a credit card company, with the expectation that you will pay it back later. If the balance is not paid off in full by the due date, interest is charged on the remaining balance, which can accumulate quickly and lead to substantial additional costs.

This situation can create a cycle of debt where individuals find themselves needing to make minimum payments that largely go toward interest rather than reducing the principal balance. As the debt grows, so do the monthly payment obligations, making it increasingly difficult to manage finances.

In contrast, building a credit history and increased flexibility with spending are generally viewed as benefits of credit usage, while stabilizing financial health would ideally involve maintaining a balanced approach to credit and expenditures. However, solely depending on credit can compromise long-term financial stability due to the burdensome nature of high interest payments.