The Corey Story

With the APR on credit cards around 18% interest, one can get into a lot of trouble if they rack up too many bills and make only the minimum payment on their card.  Although young, I steer clear of using my credit card whenever I can.  I follow some simple rules when deciding whether to use a credit card when making a purchase:

1.  How long will it take to pay off? - I wouldn’t advise using a credit card unless you could pay off the item in 2 months max.  If you let an outstanding debt lay around too long, you will end up spending an exorbitant amount of extra cash simply paying off something you already own.
2. How bad do you need the item? - If you are making an impulse purchase, make sure you will be able to pay off the bill in quick fashion.  If it is something you *can’t* live without, see if there is an alternative method to paying for the item.  If not, try and cut down on everyday costs to make up for the bill.  Make coffee at home or dine in instead of going out for dinner…it will save you that extra bit of money to pay off your debt.
3. Do I currently have a remaining balance on my card? - I never use my credit card if I have charges remaining on it from a previous period.  My motto is if I couldn’t pay my bill in full when the statement came, then I should not be buying anything else :).

Credit cards should be used only as needed and never just because.  The interest is too high to make it your preferred method of payment.  I keep one on me for emergencies only.  Sometimes I use it during holiday seasons to build credit, but I make sure whatever I spend, I will have enough to pay off the card in full when the statement comes.
[ratings]

This entry was posted on Friday, March 7th, 2008 at 2:32 pm and is filed under Finance. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.