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Most financial advisors will tell you to never use credit cards, especially if you have bad credit and want to qualify for a mortgage or car loan in the near future. However, there are times when it can be in your best interest to use credit, providing that you are disciplined enough not to exceed yourself.
If you need to use a credit card, pay the balance in full every month. Don’t pay just the minimum payments. If you pay off the balance before the grace periods ends, you won't earn any interest but you will still enjoy the benefits of financing and dividing purchases in multiple installments.
Credit Card for Tracking
Use your credit card if you need a record for tax purposes. Using a credit card is a great way to track vehicle repairs, doctor visits, prescription drugs or other expenses that may be tax deductible. You’ll then have a control of all the purchases of goods and services that can be included within your tax deductions. Remember to pay these expenses off each month.
Even for those expenses that are not deductible, tracking them can be very useful. When budgeting this will help you to know how much you spend on entertainment, eating out, transportation, etc. With all this information you’ll be able to make a budget and make the necessary adjustments to avoid overpaying.
Credit Cards Abroad
Use a credit card if you are traveling abroad. Using a credit card eliminates the need to convert currency, and your credit card company usually can obtain a better conversion rate than you can, even at your own bank. U.S. credit cards can even be used at ATMs abroad to get cash in the appropriate currency.
Moreover, by using your credit card abroad, you’ll be avoiding scams that you may not be able to detect due to not knowing the currency of the country you are visiting. Tourists often suffer rip offs when converting currency abroad and by using a credit card you’ll be able to avoid these problems.
Final Suggestions
Use your credit card only in an emergency. Credit cards should always be a last resort, especially if you are in need of bad debt management. But sometimes a credit card is necessary. A real emergency is any situation that can affect your ability to earn money, like vehicle repairs (if you use your car for working), or a family need, like an emergency room visit. If you need finance urgently since otherwise the situation may affect your income, then don’t hesitate and use your credit card. Just try to cancel the balance in full as soon as possible.
If you get in over your head with credit card debt, try to work something out with your lenders before you end up being late with payments. Most lenders are willing to agree new repayment schedules as long as you show your predisposition to repay your debt. Sometimes a low interest personal loan is a better solution. Make good use of your credit and pay it off regularly. This way you will avoid needing bad debt management.
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