Is it wise to use a credit card? Is there a benefit? Will it get me in debt? Can I use it to my advantage at all? There are a lot of financial gurus that state not to have a credit card. I agree with that mentality if you have a tough time paying that card off monthly. Credit cards usually have higher interest charges and will really kill you financially in a short amount of time. Well shoot, let’s talk about these little plastic cards, that get us into so much trouble!

Dangers of the Credit Card

What are the dangers of a credit card? There are many. I believe the number one danger is buying things we cannot afford at that moment. I like to call it “futures trading.” Most of us know what we are going to make at our job any given month. We may make a little more or a little less, but overall it is pretty consistent. Well, in this instance, we are playing a game on what we are going to make in the future. So, let’s take an example. –I need to buy a computer. I know I need it for the family because my other one is 5 years old and on it’s last leg. I decide to buy the computer even though I only have $250 in the bank. The computer costs $750, but I know I can pay it off over the next few months. I know there will be interest attached but I need the computer. Later that same day my wife and I decide to go to dinner out. I think in the back of my head what I can afford, but I know I have the credit card. Instead of something more reasonable we decide on a more expensive restaurant, spending $60 instead of $25 and have just paid $35 more than I normally would have. The next day I am working in my yard, and my hose goes on the fritz. I also need a new sprayer. I go to the hardware store and spend $90 on a hose and a sprayer, upgraded both of the items because I wanted the better features and threw them on my credit card.–

This is where most America has had it’s problem. They start with an idea of what they need……. as in the computer and then turns into what they want. If we want something, we go and buy it. We go to dinner at a place that is definitely more than we can afford and we get the products that have a few more features, even though we could’ve spent less for something that works just fine. We don’t feel the affects of these decisions until the statement arrives in the mail, or even worse, it gives us a reminder that “Our Statement is Available” in our email inbox. So instead of spending what we “need”, we start spending what we “want”. This is where a credit card really starts ruling our lives.

The Guru’s take on a Credit Card!!

Dave Ramsey is probably my favorite author on getting your finances under control. His book “Total Money Makeover” is perfect for someone who is in debt and needs a plan to get out.  He believes in not using credit cards at all.  I agree and disagree with this.  I agree that by and large, most Americans have shown that they cannot control their spending habits with a credit card.  Dave puts you on an all cash system.  I think there is moderation in life.  I receive a lot of free stuff by using my credit card.  I get free airline tickets, hotel stays, I could get a free TV if I wanted.  But, I only use it because I pay it off every month.  And I mean every month.

My Personal take on having a Credit Card and the rules to play by!!

I personally pay my credit card every month.  I do not ever buy more than I can afford.  My credit card is a record keeper and is used for the rewards.  This goes for my businesses as well.  We have credit cards in every single one of them and pay them off every month.   If you are worried at all about privacy issues, using a credit card is not for you.  But if you want to have a great record keeping tool and get a bunch of rewards, this is the way to go.  I am no where near some people but I have received a ton of rewards from Capital One.  I use NerdWallet.com to compare companies.  They have been spot on with sharing who has the best reward cards with all the details.  Side note, they also compare banks and all kinds of stuff!!!  Great site!

So the question we have to ask ourselves is….. do we have control?  Do we have the self discipline to stay in control of our finances?  A credit card can be considered an amazing financial tool or a vice that will ruin you!  I have personally talked to too many friends that are the latter.  They have let it control them and now they live in fear of a finance company.  Or, they have had to file bankruptcy.  Do not take bankruptcy lightly it is a big deal.  It affects you greatly!!  The key is to live within your means.  Buy things that you can afford and you have saved enough to afford them, before you purchase them on a credit card.  Then, at the end of the month, you can pay them off, get the rewards from the credit card and feel empowered that you just made an awesome decision!  I have gone on many trips for free because of my credit card.

It is we who abuse credit cards. A credit card cannot abuse us!  So, before going out and applying, really take time to do a self check and make a commitment to pay off the credit card each month before you get one.  If you already have one and are paying payments……we need to have a different discussion.  In the short, read “Total Money Makeover” and follow it to a “T”.  It will help you get out of debt.  So in closing, a credit card is good if you make it good, or bad if you can’t control it.