Credit cards can be very damaging to a budget, but for the disciplined user, they can also be quite advantageous. I am of the firm mind set that, with few exceptions, such as education and a house, nothing should be purchased if you cannot pay for it in cash. Having said that, there are so many credit cards out there that offer airline miles or other reward points when you use them. Here is my solution: I use my favorite reward card for ALL my monthly purchases, but I deduct the amount from my checking account in my check register as though I paid "cash" for it. Then every two weeks, within my grace period, I go online and pay my balance in full. I do not need to "come up" with any money because it is still in my checking account. I am able to rack up lots of points without paying one extra penny.
Now, if you are one who cannot help but use your credit card, even when you know you cannot afford something, I suggest cutting them up or putting them in a Ziplock bag full of water and freezing them. This way you are not tempted to use them and if you are tempted, it will take awhile for you to either get a new card or for the card to defrost. During that time, the desire usually fades. I know I have been tempted in the past to charge items that are on sale/clearance for a really good price, even when I do not have the cash to pay for the item. I have to remind myself that if I end up paying interest on the purchase, it really is not a good price.
So what is my advice? It depends on you and what you feel you can do. If you are disciplined and can control how you use your card and will pay it in full before interest accrues, I suggest getting a card that offers nice rewards. If you are not disciplined or do not think you will pay your balances in full each month, you are better off without having a credit card. The call is up to you.
Do any of you have other bits of advice regarding credit cards. Please share them.
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