Credit cards have almost become a necessity in our society. It is hard to make a large purchase, join a gym, or open any other type of account without one. Just about everyone I know has had some experience with credit card debt. The key to using credit cards successfully is moderation and self-control. Like anything else, there are pros and cons to using credit cards.
- Credit cards are a great way to build credit, if you control your spending and only charge as much as you can afford to pay.
- Credit cards are beneficial in emergency situations, when you don’t have enough cash on hand for unexpected car repairs, emergency rooms, etc.
- Credit cards are good to use on vacation to avoid carrying large amounts of cash.
- Using credit cards can make tracking business expenses easy.
- Transferring the balance of a high interest account to a low or zero interest credit card offer is a great way to pay off a debt early
- Credit cards make it easy to purchase items that you can’t really afford.
- You will make very little or no progress paying off a credit card by making only minimum payments.
- On high interest credit cards, your monthly interest is sometimes higher than your minimum payment, causing you to get deeper into debt.
- By using credit cards, you actually end up paying a lot more that what the product or service was worth.
- Once you are late on a payment, you will be charged a late fee as well as in increase in interest, making it even harder to pay the debt off.
Tips for Successful Credit Card Use:
- If using a credit card for automatic payments or membership fees, pay the amount of that payment, in addition to your regular payment every month. These charges add up quickly; if you can’t afford the monthly fee, don’t sign up.
- Don’t use store cards if you qualify for a major credit card. Department stores charge a much higher interest rate than major credit cards. If you have store cards, stop using them, pay them off, and only use major credit cards.
- Don’t take out numerous credit cards. Two cards are plenty. Keep one for emergencies only, and one to use for automatic payments that you pay off every month.
- If you use a zero or low interest offer to transfer a balance, close the account that you transferred the balance from. That way you won’t start making new charges to the original account.