This blog contains some simple tips and advice from two regular guys. We're not accountants, financial advisors, or brokers, so follow, ignore, or discuss our ideas as you see fit.

Monday, September 10, 2007

Credit Cards Aren't All Bad

Posted by Paul
You often hear about credit cards and how they are the terrible, dangerous and potentially the quickest path to putting your financial life into a shambles.

Though it's true that credit cards can easily be misused, and that this misuse can easily put a person into dire straits, if used properly they can actually be a good thing.

For example I use a credit card quite a bit, since it's convenient to not have to carry around a lot of cash. I have a card that has no annual fee (you should never have an annual fee credit card, how absurd to actually pay a company to use their card), and I NEVER carry a balance on the card. Seriously, always pay off your credit card. As long as you pay off your card every month then you don't have to pay the crazy interest. If you ever find yourself with a balance on the card that you can't afford to pay off, STOP using your credit card immediately, pay it off as soon as possible and look closely at your life because you are almost certainly overspending somewhere.

So in addition to the convenience of using a credit card, I also have a card that gives me incentive points. For example one of my cards gives me 1% of my purchases in free Amazon merchandise. Books, DVD's, and CD's are items that I like to buy but that I really don't need, so I like to use my Amazon incentive points to buy fun stuff. It's a great way to use the "free money" from the credit card to buy fun stuff.

So as long as you can use a card and pay it off every month, I think it's a great idea to get one that has some sort of incentive that appeals to you and make use of the free stuff.

I like the idea that not only is the credit card company not making money off of me, but I'm getting free stuff by using the card responsibly.

1 comment:

Matt said...

Ditto to "NEVER carry a balance on your credit card." This concept is so important that it is included on our "Basic Rules of Finance" list at right.