What Are Credit Cards For

Credit Cards For

Graph Provided by the New York Fed at http://www.newyorkfed.org/householdcredit/

This Guest Post is by Jason Holmes.  Earlier this week on 5 Minute Money Tips, Dave Ramsey’s Total Money Makeover was reviewed.  Jason presents a counter argument for using credit cards.  I’ve used many of these tactics throughout my life.

 

What are credit cards for according to Dave Ramsey?  The best uses of the credit card are to use as coasters, for scissor-cutting practice or testing a lighter’s flammability. The latest study show that a large number of consumers is in staggering debt. However, the credit card comes with its benefits as well.

Post World War II, America shifted from a cash to a credit oriented society. Most of the American families believe in the concept of “buy now, pay later.” In the present era, the consumers are keen to fulfill their wants as well as aspirations by using their present and future income.  That is what credit cards are for.

Overtime, the credit card soon replaced money in the bank.  As a result, consumer credit grew and percentage of savings dropped considerably.

In today’s society, is the old adage still true – If you don’t have the money, don’t buy it?

Credit Cards For Using Wisely

The bottom line is that if you are going to use your credit card, use it wisely.  Here are some of points to consider in order to use your credit card wisely:

  1. Credit Cards are for Emergency Use: A Credit card is a great companion for using in time of emergency. If you visit foreign country and lose your wallet, then using credit card can be a wise choice. But if you feel like splurging on an expensive carpet, then your credit card can be a wrong option. Make sure you buy things within your means to avoid getting into debt. You need to carefully analyze your emergency situation, when you can actually use the card.
  2. Credit Cards Are For Paying Your Bills: Credit cards can be beneficial if you use it for automatic bill payment. Make sure you pay your bills on time to avoid penalty charges. You can use your reward points when you use your card for paying utility bills. In case you have a low balance in your checking account, using the card can lower the risk of overdraft fees. Make sure you find out from your credit card company whether it charges a fee for using its bill pay services

Credit Cards For Not…

Credit Cards Are Not For Impulsive Buyers: If you consider yourself to be impulsive buyers, then be careful with your credit card. You need to be aware of the positive and negative aspects of using a card for buying everyday impulsive items such as clothing. Make sure you review your budget before using the card. It can help you analyze whether you’re capable for using the card and paying it back on time.

If you use multiple credit cards and carry balances, consider consolidating your bills to manage them effortlessly.

Keep the above mentioned points in mind if you want to use the card wisely. Credit cards are beneficial for the users who know how to use it wisely.

 

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