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Credit Cards - Using Them to Your Advantage

Updated on August 14, 2010
Thanks Brett L at Flickr!
Thanks Brett L at Flickr!

Credit cards are everywhere and they are quickly becoming THE way to pay for things. MasterCard, Visa, Discover, American Express and more are the preferred way to pay for many people. Credit cards can be a wonderful tool for personal finance - if used correctly. Unfortunately many people use them to purchase items they can't afford or to pay their living expenses during tough times. While it is nice to have a credit card to fall back on, repaying that debt is going to be very hard. Let's look at the right ways to use a credit card and how credit cards can benefit you if you use them this way.

First, you should never carry a balance. If you are going to use a credit card, you need to pay off the balance every month. This is good for your credit, this saves you money rather than costing you more money, and many times the credit card company offers you a bonus for charging things. This is one way credit cards can be advantageous. For instance we have an LL Bean credit card. We got this when we realized how many times we bought things from them and paid shipping charges. Having this type of Visa card allows us to get free shipping and monogramming (something we wanted) AND we earn coupon dollars every time we use our card. Find the right card for you and you can benefit this way as well.

Pay your credit card bill on time. The minute you incur a finance charge, all benefits are lost. Not to mention that paying your credit card bill late will damage your credit score rather than help it.

You can use your credit card to buy yourself some time. For instance when I needed dental work done I didn't have time to save the money ahead of time. By using the credit card I was able to give myself a month to come up with the money. I knew I could pull it from savings if I needed to, but I wanted to try to come up with it out of our regular budget. Buying myself some time helped me do that. Another way it can buy some time is if you have your emergency fund in an online bank account, like we do. It takes a few days for the money to transfer. We use the credit card for emergencies, then transfer the money from our online bank and finally pay the credit card in full. Another plus in this is that our money earns interest longer in the bank this way.

One of the biggest reasons why we use our credit card is for security when shopping online. Online shopping makes me nervous because sometimes the wrong people can get your information and charge random things. If this were happening with my bank account it would wreak havoc on our checking account, our budget and our lives. If this happens on our credit card it is a minor inconvenience.

As long as you don't overspend and pay your bill in full and on time credit cards can really benefit you. How do you make your credit card work for you?


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    • WestOcean profile image

      WestOcean 7 years ago from Great Britain

      Sensible advice!

    • drcrischasse profile image

      drcrischasse 7 years ago from NH/Foxboro

      I wish we all would take your advice. You always hit the nail on the head.

    • Hello, hello, profile image

      Hello, hello, 7 years ago from London, UK

      Thank you for your wonderful help.

    • profile image

      culturespain 7 years ago

      Credit cards are a great tool but are, I suspect, the cause of considerable debt problems. I agree with your Hub and that if you use them - make sure that you pay everything back monthly!

    • prasetio30 profile image

      prasetio30 7 years ago from malang-indonesia

      nice information, my sister has a bad experience with credit card. I thought there's no problem if we can pay the bill on time and there's no delay on the payment. We use the credit if necessary. Don't ever think this card as a debt card. Great hub. Vote this up'


    • Dim Flaxenwick profile image

      Dim Flaxenwick 7 years ago from Great Britain

      great hub. My husband always stays in credit and uses ´the buying yourself some time´method as you´ve described., Thank you. Nice work.

    • vocalcoach profile image

      Audrey Hunt 7 years ago from Nashville Tn.

      Good information on the ways to use credit cards. I try to go all cash these days. Thanks for the very good hub.

    • dallas93444 profile image

      Dallas W Thompson 7 years ago from Bakersfield, CA

      Good information. Thanks for sharing.

    • profile image

      peacefulparadox 7 years ago

      That's right. Ideally, one should try to pay off the entire balance of the credit card as soon as the bill arrives. That way you get the convenience using a plastic card rather than carry a wad of bill. But that way, you don't let the card company charge you interest. Of course, it is understandable (especially during a recession) that some may not be able to pay it off in full every month. But to the extent that one can, it would be helpful.

      One drawback of using credit card is that it makes it way to easy to purchase things: just slide a card and press a few button (some don't even make you sign anymore if the purchase is less than a certain amount).

    • Lily Rose profile image

      Lily Rose 7 years ago from East Coast

      Great hub, Jennifer, and excellent advice. Unfortunately, I carry a large balance on one credit card but I have a payoff plan and when it's finally paid off I do plan on using your plan here - it's very smart. I recently was a victim of fraud and ID theft but luckily I caught it early (I think!) - to be safe, I closed all my credit card accounts and requested new cards/new the process I realized that I had a large point balance on a credit card that I haven't used in a long time and I cashed in the points for $120!

    • spconlin profile image

      spconlin 7 years ago from Wisconsin

      This is an very informative article. Prior to switching to a purely cash-based financial plan, the plan for credit card usage that you laid out is what I was considering. It is obvious that you have put a lot of thought into your use of credit. Thank you for sharing this.

    • DiamondRN profile image

      Bob Diamond RPh 7 years ago from Charlotte, NC USA

      I have carried a balance only a couple of times; after a vacation to Hawaii and one to Greece, but in both cases I paid them off the following month. Credit is a wonderful tool that can become a deadly weapon, if not used properly. Over the years I have had so many friends wind up in credit card Hell.