Avoiding Credit Card Perils

Making Credit work for you

So, how do we avoid the perils of credit card usage, and enjoy the benefits? In order to minimize the negatives and maximize the positives, we must remember that credit cards are a privilege, not a right. We have the responsibility of keeping track of our purchases and making sure that we will be able to pay for them when the bills come due. It's like giving someone a loan with the intent that they will pay you back. I'm sure you may have been burned before be it a family member or a friend. I'm sure you recall it as a very negative experience. If you loan someone something, you expect it back. When you don't get it back it can be very upsetting. If you didn't like someone doing this to you, why would you want to do it to someone else?

In order to make credit work for you, the ideal situation is to have the funds to cover your expenses in full when they come due. If you have to pay on a monthly basis or worse yet paying only the minimum amount when the payment comes due, you are going to end up paying many times more than you borrowed. That $100 jean at the end of your minimum monthly payment might end up costing you $300 or more. So, while you may have appeased your immediate need to buy that item, in retrospect, you could have bought several of those items had you simply waited and paid cash.

Credit can help us get through the tough times and it is good to have a card that you can fall back on in times of emergency. This is absolutely ok. The problem is when people become dependent on their credit card when they have no means of repaying their debt.

Next time you are about to use your credit card, first ask yourself if it could wait. Ask yourself if this item is a need or a want. If you put off a want, chances are you'll pat yourself on the back later for not getting it. A need on the other hand is a different story altogether. Just make sure that you have the means to cover those expenses later and you will be on track to making your credit cards work for you.