subject: How To Use Credit Cards Responsibly [print this page] Depending on who you talk to, you may hear that credit cards are either a wonderful thing or a terrible idea. You may know some who preach about how credit cards can be a huge benefit during an emergency, while you may know others who will go on and on about how credit cards should be avoided at all costs. Rest assured, though: credit cards are not evil, as many people may like to say. They are a tool, and like any other tool, they can be used correctly or incorrectly.
The trick, then, is to know how to correctly use credit cards. You would not swear off knives and declare them useless and evil if you cut yourself while juggling them, would you? No, because you would know on some level that knives can be used correctly or incorrectly, and your incorrect use of the knives is what caused the problem. Credit cards are the same way.
The first step to figuring out how to use credit cards responsibly is to know what they are good for. Then, you can take the next step and figure out how to take advantage of those strengths. One of the best things about credit cards is that they give you flexibility in difficult situations. They can also be required in order to conduct many types of business. Furthermore, they can help you build (or rebuild) your credit score.
Taking advantage of the flexibility credit cards give you does not mean to max them out on spending sprees at your local mall. Instead, it means that when you need money, especially for emergencies such as your car breaking down, or for certain settlements, you can use credit cards in the way that you might use a short-term loan. Afterward, the key is having the discipline to pay back the owed amount in a timely fashion, rather than simply paying the minimum balance and slowly chipping away at the debt while paying tons of interest.
When you check into a hotel or rent a car, you will often be required to have a credit card on file. Now, these days you can often use a debit card for the same purpose, but if there are incidentals to take care of after the fact, you do not want your checking account to be overdrawn by extra charges. Furthermore, some companies specifically require a credit card, rather than a debit card.
Finally, credit cards can be used to build up your credit if you do not have much of a credit history. You can also rebuild damaged credit with the smart use of credit cards. In either case, there are a few keys to focus on. One key is not to charge your card up near the limit. Potential creditors and debt buyers often look at the percentage of your available credit you have used up as a sign of your worthiness for a loan, so charging all of your cards up does not look good on your credit. Also, make sure you make your payments on time, which shows that you are responsible and can be trusted.
If you use credit cards correctly, they do not have to be a bad thing and in fact, can be very beneficial. Credit cards do require a lot of restraint, as it can be very tempting to get in over your head and promise yourself that you will figure it all out later. Instead of doing that, spend with a plan when you use your credit card and pay back all of your debts promptly. This is most beneficial way to utilize the financial tool that is a credit card.
