Conventional personal finance wisdom has it that you should be debt free and one way to prevent acquiring debt is to get rid of all of your credit cards.
A concession is to have at least 1 credit card for those choice emergencies like when you need to purchase something essential quick and you don’t have cash on hand with you.
With the new credit card law in effect, there are some salient arguments that are for owning a credit card. If you decide to get plastic, here are some of the things you might want to keep in mind when getting and using one.
1. Make sure you know the fee structure. Make sure you know all the fees that go with your card including annual fees, and interest rates. Keep in mind that the new law has prohibited things like inactivity fees so you can keep your credit card in your wallet without getting penalized.
2. Pay monthly and pay in full. This way, you basically just advance your purchases and not incur any charges on interest.
3. Spend only on items where you won’t get discounts paying in cash. This way you get to rack up points and incentives through your card.
My take on the matter is this. I do have one credit card and I use it for many of my purchases. I use it for common purchases such as groceries or when dining out. These are basically spending that’s the same whether I use cash or card. Larger purchases often allow you to get discounts when paying in cash and I use cash for those.
In return, I rack up points that I use to get my annual fee waived and a few miles thanks to my card’s frequent flyer miles program. All the while enjoying the benefit of not having to lug cash around with me every time.
