That is a very legitimate and dangerous question, but it
is a question that pretty much everyone faces in today's
economy - Should I use credit cards for everyday
expenses? I have to admit that I do use my credit card
for everyday expenses. I say credit card (singular)
because, even though I have more than one credit card, I
actually only use one of them. I also use my debit card
a good bit, cash or checks - in that order or
preference. Let me go into a little detail of why I use
these in this order.
|
I
use my credit card because I get points for every
purchase that I make. Now, points do not buy a lot; but
they can add up over time, especially if you use the
card on a consistent basis. Keep in mind that credit
cards can be a dangerous instrument - my Grandfather
would probably call them an instrument of the devil -
and that is exactly what they can become if you are not
careful and practical (but please do not think that I am
practical... I am far from practical according to many
people, but practicality is a subjective call).
|
In a typical month, my credit card statement will have
purchases from the gas station (an outrageous amount
these days), from the grocery store (getting higher
every month), from restaurants, bars, yadayadayada -
pretty much everywhere except for the Florida Lottery
which has to be in cash. The good thing about my monthly
statement is that I see every month where I paid off the
last month in full. I carry no revolving balance. I
think this is very responsible of me, even commendable;
and the payments are on time as well. This way, I am
being charged no interest from using the credit card, no
late fees; and I get my points each month. Pretty slick,
huh.
|
I
am fortunate that I got my credit card with no annual
fee. There are a lot of these cards still out there so
if you are applying for a new card, look for one with no
annual fee first. This is very valuable. The next thing
to consider is the interest rate if you plan on carrying
a balance. Even if you do not intend to carry any
balance from one month to the next month, still consider
the interest rate because you can never tell when you
might actually need to carry a balance over or spread an
unexpected charge over a couple of months or more.
|
I
realize, however, that some people may not have the
luxury to pay off their balance each month. Some credit
card users might be faced with unexpected problems such
as unemployment or medical bills which might tempt them
to use their credit cards more heavily than usual. For
these situations, carefully consider the possible
repercussions; and think about how things will look a
few months later. Will you be able to pay off the
balance in the near future? Is this a short-term
setback? Will you be employed again in time to catch up
with the payments? Consider all of your options very
seriously as the credit card companies are relentless
and ruthless once you start missing payments. They are
far more relentless and ruthless than the mortgage
companies. They will call you and mail you and email you
and they will do these things consistently and often.
There will be no "letting up" until your unsecured debt
is paid.
|
My other options - debit card, cash and checks - are all
secondary in my situation. Some places will not take my
credit card type so I try the debit card. Some places
will not take any sort of plastic so then I pay in cash.
Checks are usually just reserved for big payments that I
have to mail to people like mortgage payments (which are
now rent payments).
|
I
should also mention online bill paying and automatic
bank drafts. If at all possible, I set up any regularly
recurring payments on automatic bank drafts so that I do
not have to worry about them. For the occasional bill
that cannot be setup on auto bank draft, my bank offers
online bill paying; and this comes in pretty handy -
especially for my rent checks.
|
People have a huge variety of options when they consider
how they handle their financial obligations - credit
cards, debit cards, cash, checks, automatic bank drafts,
online bill payment, etc. Whatever method you prefer,
consider all of your options and weigh the costs and
benefits of each.
|
|
We
would love to hear your take on using credit cards or
other payment methods for dealing with your own everyday
expenses. Click the comment button and add your comments
to the bottom of the blog page. We look forward to
hearing from you.
|
