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| Education and Financial

08/12/14

Credit card fret: Using plastic is perfectly fine if done correctly

Having a credit card really isn't that big of a deal. Spending it wisely is quite another thing altogether.
Think about the purpose of a credit card and wonder how you would define how they're supposed to be used.
The ones who understand the positives of credit cards argue passionately that their best used in times of emergencies. If the washing machine decides to break on a whim or your car breaks down just as easily, turning toward a credit card isn't the best alternative but is at least more acceptable in this instance.
For the rest of the population that treat credit cards like their own bank account instead of borrowed money, the outlook isn't so optimistic. This is particularly pertinent for those who choose to use credit cards for not only incidental purchases like buying groceries but also to pay bills, a truly slippery slope that isn't really addressing the issue of debt or poor credit but rather borrowing from one to pay another, only adding to the amassing total dollars owed.
Some so called savvy home owners actually use credit cards to pay their mortgage or other bills, a move that is justified on their end by the points and benefits the card offered. That thinking might work if you're adept at paying off the balance the very next month, but there's no guarantee you'll be able to keep up that pace.

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What exactly happens if you get behind just one month? That's 10-20% interest you'll be paying on a pretty hefty sum of money. If you use credit cards to pay the utilities, cable or phone that probably is an indicator that your budget is in need of revamping. Cutting your cable cord or telephone plan might seem more intelligent than continually adding to debt that you can cut.
Perhaps even worse than using credit cards to pay bills is using them to pay on other credit cards or even bills that would be better left alone. Case in point is medical debt, which typically carries little to no interest rate. You can negotiate a payment plan with most medical providers, which are more than happy to give you a low, fixed monthly charge. Why would you consider paying a high interest rate when you don't have to?
No one can argue that credit cards can be a good thing, but only if you manage them wisely and realize why they were created in the first place.

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