One financial analyst is warning people about credit card use in the new year, urging them to be wise in how they use it.

Prakash Ramlakhan says while the credit facility may sound enticing to offer a buffer between salaries and bills, if people are not careful, they could end up in a bigger financial hole.

Speaking on CNC3’s The Morning Brew, Ramlakhan said a credit card can be an asset if you’re financially responsible.  However, if you’re not, he warns, it can lead to big problems.

“It is a very costly loan,” he says. “Credit card interest is perhaps the highest you will find in the financial sector.  Your payments may be small. They may not be much trouble to maintain by paying the minimum balance, but the interest on that could be huge.”

The financial analyst advises financial discipline to ensure you can benefit from the features the credit card may provide—points and cash back, among others—without digging yourself into a financial hole.

“Use the card wisely. Use about 25% to 35% of the card balance,” he recommends.  “If you can pay the full amount before the end of the cycle when it is due, thus accruing no interest, then you are using the card wisely.”

Prakash Ramlakhan cautions that using credit cards unwisely can quickly lead to disaster.

“Using your credit card to cover your bills will put you in a tremendous hole you don’t want to be in,” he warns.