Why Credit Cards Are Catching A Bad Rap (and Why They Dont Deserve It)

It seems like every time you turn around, credit cards are catching a bad rap these days

. The interest is too high. The fees are ridiculous. (As a matter of fact, where I come from, a number of small businesses have stopped accepting credit cards altogether because theyve had enough.) All they do is drive good people deeper and deeper into debt.

Whats missing in this rhetoric of doom is that credit cards serve a valuable purpose. This important purpose is the reason that credit cards came into being in the first place - that of solving a temporary, one time cash deficiency in the event of emergency. They were not meant as a tool to spend lavishly on unaffordable luxuries.

An Extension of the Barter System

Credits actually been around a lot longer than youd think. It wasnt unusual, in the days when this country was still being built, for stores to sell families food and supplies on credit. The store owner would keep a logbook, and families would pay off their balance as they were able. For a farming community this was a practical solution; it meant that accounts could be paid when the funds were available, and that employees could do the shopping as needed without needing to be entrusted with cash that always seemed to be in short supply.

As more people left the farm for paid jobs in manufacturing and other industries, stores were forced to change their business model and the credit system fell into decline. The new model was cash on the line for goods and services rendered. Then as now, however, there was apt to be too much month at the end of the money, particularly if an emergency cropped up and there was no way to pay for it. Credit cards came to the rescue in the place of the old journal system.

Proper Care and Handling of Your Credit Card

Credit cards are just little plastic rectangles with a magnetic strip on the back. Their usage is totally dependent upon the owner of the card. Following are three extremely easy steps to keep you from piling up debt on your credit cards that you can never repay.

1) Limit emergencies to GENUINE emergencies, those that cannot wait until payday. Your basement filling up with water because of a busted water heater is a genuine emergency. Use your credit card. Not having the cash to purchase a ticket to the Rolling Stones concert coming to your area is not. Do not use your credit card.

2) Do not splurge on impulse buying. If the cash isnt there to buy what you want now, chances are it wont be there later either. That bearskin rug is a perfect fit in front of your fireplace in the den, but the fiscally responsible thing to do would be to set aside a little money from your paycheck each pay period until you have enough to purchase the wondrous item with cash.

3) There must be ample money in your checking account to pay off your credit card balance each month. We have all experienced the need to call a plumber and know that when we do, we are facing a minimum $250.00 bill. But that cute $150.00 doggie sweater that was on sale you put on your credit card because you were cash poor is not making the cut. To remedy such errors, as soon as you get home, remove $150.00, plus the typical interest fee from your checking account, and put that amount into your regular savings account. Repeat for all non-emergent credit card purchases and you will always have enough to cover the statement without having to pay any fees.

Credit cards dont incur debt. People incur debt. Remember, your credit card is a small, innocent piece of plastic. It wont get you into financial trouble, you will when you use it unwisely.

by: Joe Villanvera

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