Why Credit Cards Are Getting Bad Press - Do They Deserve It?

It's hard to read any newspaper, magazine or catch some TV news report without hearing some dire news on the credit card front

. The interest rates are soaring. The fees are astronomical. In fact, some small businesses have quit accepting credit cards all together due to the high merchant fees. The only thing credit cards and their issuing banks are good for is to drive people to the brink of financial disaster.

What is forgotten in all this doom and gloom is that credit cards serve a worthy purpose. Their intent was never to put people hopelessly into debt. They were meant to be a temporary solution to a temporary financial need.

An Extension of the Barter System

Credit's actually been around a lot longer than you'd think. It wasn't 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.

This credit scenario ended when masses of folks from the primarily agrarian society migrated to the cities for paid jobs. The stores had to change their business model thus marking the end of the credit system. Payment was due at the time the transaction for goods or services was made. For many people, there was still more month than money and should an emergency arise, there would be no cash available to cover it. Credit cards made a come back to solve this dilemma and so replaced the original rural credit system.

The Care and Handling of One's Credit Card

In and of themselves, credit cards are nothing but small pieces of plastic with a magnetic strip on the back. How you use them is entirely up to you. Here are three very simple tips for the care and handling of your credit card that will completely eliminate the chances that you'll find yourself holding a bill for a $10,000 balance you can't afford to pay:

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) Resist the urge to splurge. If you don't have enough money for it now, there's an excellent chance you won't have enough money for it later. Those car seat covers are great, but you'd be better off saving a little bit of money each week and paying cash than putting them on your card.

3) Keep enough money in your checking account to pay off your balance. I understand those $500 plumbing bills pop up right when you least expect them too, but that $20 blouse you just put on your VISA because you didn't have any cash? As soon as you get home, pull $20, plus the amount of your interest, out of your checking account and put it in savings. Repeat for future purchases, and you'll always have enough money to pay your bills.

To paraphrase the anti-gun group - credit cards don't incur debt, people do. And like that gun, a credit card is only a tool. Use both wisely if at all.

by: Joe Villanvera

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