When should I use my credit card?
This blog is meant purely for educational discussion of finance. It contains only general information about financial matters. It is not financial advice, should not be treated as such.
Credit cards are an interesting animal, they are a necessity nowadays, if the entire balance is paid diligently they are an asset, if a payment is missed or not payed entirely it could mean financial distress in the near future. There are a few situations where having a Credit Card might work in your advantage, lets take a look at them;
1) Paying your monthly bills; channeling all of the monthly payments like gas, food, electricity etc through the credit card then paying it off completely each month will net you all of the benefits the cards might have.
2) No credit history, lets say you just graduated college, live in your parents house and want to buy a car on your own (without mommy or daddy's help), if you do not have credit history you ain't going nowhere, getting a credit card and paying it every month will start your credit history.
3) While traveling using your credit card means you will not have to carry that much cash.
Numerous credit cards, each with their set of perks are available nowadays, look at each closely then pick according to your profile.
If you happen to travel often, picking a card with miles or points might work out for you, there has been much debate over cash back vs miles, here you can find out more concerning that debate as well as examples of cost.
Usually cash back ofter more value in the long term, this is factoring in the yearly fees which eat into your returns.
I happen to have a cash back credit card which has no fee annually, in my opinion works very well for me, they pay me to have their credit card.
Focusing on the different APR's in my opinion is not very useful, your credit card should be paid in full each and every time period, in this way you will avoid all of those penalties.
if you are advancing cash from the credit card or transferring money then the fees will accrue.
Bottom line - live within your means, if you cannot afford something, DO NOT use a credit card to buy it, you are pretty much taking out a loan with a very high often times >14% interest rate.
Till next time,