Credit Cards Aren't So Bad

When someone mentions credit cards, what do you think of? High interest rates, late fees, lifetime of debt, ruined credit? Well credits aren’t so bad; it’s misusing them that gives them a bad name. I got my first credit card in college and since then I’ve use it on almost every purchase and thanks to it, I’m in the process of buying my first house. Most people wonder how do I handle the high interest and how do I have near perfect credit if all I use is my credit card? I know this sounds like a cliché late night joke but it couldn’t be more true, “Don’t buy what you can’t afford.”

Most credit cards give you a several thousand-dollar line of credit and only ask for a $20 or 2% payment every month, whichever is higher. Well think about it, if you buy a $1000 item, let’s make it a laptop computer, and pay only $20 a month for it, even without interest, it will take just over 4 years to pay off that computer. Now with interest, let’s say 19.99%, you’re looking at between 10 to 20 years. Your computer is probably going to be obsolete by the fifth year. Just because you can spend several thousand dollars and make minimal payments doesn’t mean you should. I pay off my credit cards in full every month. Since I pay them in full, I don’t get charged interest plus there are rewards (I’ll get to that later).

By using credit cards instead of cash, you can also protect yourself from fraud. Most of us either know someone or fell victim to wallet theft, I’m a victim. These criminals next to never caught. If all you carry is cash, you’ll more than likely never see that money ever again. So if you were carrying $100, you just lost $100. The people who stole my wallet went on a shopping spree spending over $6000 with my credit cards. My credit card companies caught it and were able to put a stop to most of the charges and I wasn’t responsible for any of the charges.

If you pay off your credit cards in full, most credit card companies also give you rewards. Whether it’s miles, gas, cash etc. it’s actually pretty useful. My first credit card gave me 1% back on all my purchases and 5% back for the first 5 years, 2% after that, on purchases made in grocery, gas, or drug stores. Although it doesn’t seem like much whenever my total got to $100, once every 3 to 6 months, I could request a check. Might not seem like much but an extra $100 every 3 to 6 months never hurt anyone.

So how does one always use credit cards without drowning in debt?

1. Set a budget. Or as one person put it to me, “use your credit card like a debit card.” Calculate how much you make a month. How much of that is going to payments that can’t go on a credit card: mortgage, rent, car payments etc.? Whatever amount you have leftover can go on a credit card.


2. What other payments that need to be made? If your gas, electric, water, etc company allows you to pay off your month bill using your credit card without interest or fees, take advantage of that. Whatever is leftover is your budget.


3. Now to prevent yourself from going overboard check your activity at least every other day, if not everyday. That way you have an idea of how much you have left. One great thing about credit cards is that if you need something on Wednesday but you don’t get paid until Friday and you don’t have any money, you can put it on the credit card.