“Rather go to bed supperless than rise in debt.”
“Buy what thou hast no need of, and before long thou shalt sell thy necessaries.”
-Benjamin Franklin
One area of much debate is the subject of credit cards. There is a lot of discussion about credit cards and much to be said about the good and evil of using them. Many advisers recommend avoiding credit cards because of the danger and yet we are living in a digital age where the use of cash and checks is becoming obsolete. The key is using the credit card properly.
I strongly agree with Benjamin Franklin on the topic of credit cards. Hang on, what do credits cards and Benjamin Franklin have in common? They didn’t have credit cards back then! True, but try reading the quotes at the top of the page again. Those quotes summarize the proper use of credit cards. Don’t spend money that you don’t have and don’t buy what you want just because you have the credit limit which will put you in overwhelming credit card debt.
A Serious Note
If mismanaged, a credit card can ruin your credit, your reputation, and your life. This country is full of people who are hopelessly in debt because they cannot resist the convenience of swiping their card whenever they desire something. The pressure of the debt tears apart families, hopes, and dreams, not to mention causing depression. On the other hand, credit cards can provide the benefit of being able to purchase online, and not having to carry cash. A credit card offers greater security than a debit cards due to the fact that if there is a fraudulent charge, you are not out of the money during the dispute process. You can use a credit card to assist in your budgeting by paying your normal bills with the credit card so you have a consolidated place showing the payment of your bills on your credit card statement, not to mention the many rewards that credit card companies offer. So you have a choice, let a credit card improve your life or ruin your life.
Pay Off Your Statement!
The key to using a credit card is simple. Only charge what you can payoff at the end of the month. If you can’t pay it off, DO NOT BUY IT! You must payoff your statement every month. Period. End of statement. (Pun intended) Do not be deceived by the words “amount due” or “minimum amount due” as this is the amount they want you pay so you will get stuck in their trap of paying interest. Pay the amount of the statement and you will not pay interest. There is no excuse for being surprised by your credit card statement. You are the one who used it to make the purchases, so you should know what is on the statement. In this age of technology it is easy to track your statement balance since you can check it online where it is usually updated every day. You need to keep a running balance in your head as you use your card so you always know your credit card balance. Remember, it is up to you to choose whether a credit cards helps you or kills you financially.
Choosing a Card
One last thing, choose your credit card carefully. Watch out for annual fees and a lack of rewards. The credit card companies charge merchants every time you use your card which means they are making money from you without you having to pay an annual fee for the privilege of using their card. If your credit card doesn’t give you some type of rewards, get a different card. You can get cash back, travel miles, points for different items, etc and there is no reason not to get something back from your credit card. Shop around the different card options and get a credit card that gives you decent rewards without an annual fee (Yes, I know I repeated that point but it is important). Oh, you may be wondering why I haven’t mentioned interest rates. Here is the thing, if you payoff your statement every month, you won’t pay any interest no matter what the rate. Obviously, if you carry a balance on your card you need to find the lowest interest rate so you pay the least amount of interest. However, do not fall into the trap of thinking that a low interest rate is good. Remember, paying no interest is what is good, which is what you will do when you payoff your statement every month. (Have you gotten the idea that you are supposed to pay off your statement yet?)