When and Why I Use My Credit Card

by Kristina on April 4, 2012 · 9 comments

visaI have a love/hate relationship with my credit card. I loved using my credit cards in the past when I needed them, I hated paying off the debt over several years, and now I love using them responsibly and watching my credit score get stronger and stronger each month.

I have definitely made my share of financial mistakes in the past and after I finally hit rock bottom I decided to become a responsible young adult and change my financial life around.  I decided that I was sick and tired of having debt and making monthly payments onto my credit cards because that money could otherwise be better spent.  I started paying off all of my credit cards with automatic payments and I set a target date to become debt free.

I know that debt can be overwhelming, but it can also be overcome.  Financial mistakes are fixable and all we have to do is want to change. The financial system does give second chances and as long as we learn from our mistakes our financial future does not have to be a repeat of our financial past.

People can rebuild their credit history by continuously paying off their debts on a regular basis, keeping their balances low relative to the overall limit, and no maintaining more credit card than they need.

The key to building a strong credit history is to know when and why to use our credit cards. I used to misuse my credit cards in the past and that is how I found myself with tens of thousands of dollars in debt at a very young age.  Now every single time that I want to use my credit card I think about my purchase and I ask myself “Would I have made this purchase in the past?” If the answer is “yes” then I don’t swipe my card.

Here are Some Financially Responsible Reasons to Use Your Credit Card:

If the store does not accept debit cards as a form of payment and we don’t have cash.  It’s ok to us our Credit Card in this situation because this is beyond our control. We just have to make sure that we make a payment to our Credit Card as soon as possible in order to avoid interest charges.

If we are a little bit short on cash for our purchase. This is a good reason to use our Credit Card because we do have the money, just not on us. We can make a payment to our Credit Card as soon as we get home.

For the Extended Warranty.  If we have saved up for a big purchase such as appliances or electronics it’s a good idea to charge the purchase on our Credit Card for the extended purchase warranty and pay off our purchase as soon as possible.  We purchase our item, we save on interest, and we still get a guarantee.

(Btw if you’re looking for a great new card check out Budgets Are Sexy’s list of great credit card offers. Maybe you’ll find one you like there.)

Here are Some Reasons Why We Should Never Use Our Credit Card:

Just because an item is on sale.  Unnecessary spending is a major reason why people accumulate debt.

If we constantly find our self short on cash.  This is a budgeting issue and using our Credit Card until we receive our next pay check is not fixing the problem, it is only a temporary solution. We need to go over our budget and make cuts in our monthly spending to make sure that we can afford our daily living necessities.

As a personal loan or cash advance.  There is no grace period on cash advances and we are charged interest as of the day we take the money.  The interest rate on cash advances is also a lot higher and therefore we should try to avoid them.

Photo by Money Blog Newz

{ 4 comments… read them below or add one }

1 Modest Money April 4, 2012 at 12:15 pm

Yes I guess it must be tough to deal with credit cards after previous bad experiences with them. I can’t say I ever got into big credit card debt. So I have no problem using it for most of my purchases. I just use it in such a way that I’m only charging what I can afford to pay off that month. This way I get cash back rebates on all those purchases without it costing me a thing. I also don’t have to worry about my bank account’s debit card transaction limits.

2 Charged Off Chuck April 4, 2012 at 1:32 pm

When I was a youngster I had a credit card charged off that almost cost me a bankruptcy. After several years of bad credit I have chosen to use my new card for paying for gas at the pump and online purchases. I ALWAYS pay the full balance each month!

3 Lee October 17, 2012 at 7:05 pm

My friend just turned me on to this site a few days ago, and I love this post! I didn’t realize that a credit card can give you extended warranty on purchases! I’m going to go look over my stuff and see which ones do that. I guess I must be a little paranoid since I always want that extra protection :)

This could be a great way for me (and others) to save money going forward! REALLY appreciate the tip. So glad my friend told me about this site!

4 Kristina October 17, 2012 at 8:27 pm

@Lee – Welcome to Dinks Finance.

@Chuck – Sometimes we just have to learn the hard way. I had my own experience with bad debts but just like you I overcame it. What a great feeling.

@Modest Money – That is how I live now too. I only charge what I can afford to pay off within a month.

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