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Use your credit card to your advantage

Updated on January 27, 2014

Credit cards can be a wonderful tool

Credit cards allow the owner to do things they could not otherwise do. Shopping on line is a best a hassle if you are not using a credit card. Many items cannot be purchased without the use of a credit card such as motel room’s automobile rentals.

Can you imagine going on a vacation or a business trip with a wallet full of cash and no credit card?

Credit cards provide so many advantages to the user. Many provide cash back on purchases, bonuses such as airline travel miles, or even contributions to your Roth IRA. I recently obtained up a card that will put two percent of all purchases into an IRA. Think about it two percent of something I would have purchased anyway! When I was recently on a trip for my employer I made over 100 dollars for my IRA. Not a bad little bonus. I have a friend who went to Chicago for a month for the company. The motel bill came to $4900. He got a 5 percent rebate back. On meals he used another credit card and got 3 percent on food! I commend the man.

A monthly statement is provided which makes all of your purchases identifiable. The monthly statement can be used as both a tax or budgeting tool. Going back over the past year can reveal where your money is going.

A credit card can be used to pay many bills on line over the net. No more licking stamps and mailing letters.

If you come upon a sale a credit card can allow you to purchase those goods on the spot at a very favorable price.

No payment is due until a fixed number of days after the billing cycle is over. That is like having up to 55 days interest free!

When you own a credit card you do not have to carry around a lot of cash. You have less worry about theft. If a thief steals you credit card your liability in most cases is only 50 dollars!

The ability to dispute charges when using a credit card gives the used increase leverage with a merchant. I joined a health club and paid for it with a credit card. Two weeks later the club was closed. I contacted the credit card company immediately and received a full refund. Those who paid with cash or debit card were out of luck.

With all of these wonderful features credit cards should be the answer to most of people’s money problems. Sadly they are in some case just the opposite.

Credit cards can be devastating to your financial well being

Too many people do not use credit cards wisely. My dad once said if you cannot visualize that spending money with a credit card is the same as taking dollars out of your wallet do not use it. I think that is pretty good advice. Many times when a person spends with a credit card they do not think of the cash involved only the goods they want to purchase.

Are you having a hard time with your credit card bills? Next time you take it out take my dad’s advice. Think of it in terms of pulling the dollars out of your wallet. Better yet think of it as how many hours you have to spend as a casher standing behind a register at Target. Think about how sore your feet feel and your legs hurt. Remember that woman with the nasty temper who chewed you out because the store was out of a sale item. This analogy can be used for any occupation; there are just some things that make your job ugly. When you think of hours spent changing light bulbs over a blast furnace during the summer to pay for that big screen television perhaps you do not need that television at all!

Are you carrying a balance on your credit cards? Think about how much that dinner really cost you! The bill may have come to 50 dollars but if you are paying 23 percent interest on the money that dinner could cost you more like 70 dollars. Perhaps a baloney sandwich will sound better. I had a guy ask me if 16.99 percent was a good rate. I answered yes it is very good! Good for the credit card company not for him!

Pay your balances off on time. Work two jobs if you need to in order to pay off that balance. Manage your credit or you will lose your financial freedom. You will live a life of financial insecurity.

Live within your means. Do not spend everything you make each month. Know what your financial situation really is.

Buy items you really need on sale and where possible negotiate prices. Often lower prices are available to those who ask. A dollar negotiated is a dollar earned.

Credit cards can be a blessing or a curse. It is your choice!

Credit card friend or foe?

Do you carry a balance on your credit card?

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