One can read much these days about how bad credit cards can be for their hapless owners. Credit cards carry too high an interest rate; fees are outrageous, making them too expensive and too dangerous to carry. Many smaller businesses have actually stopped accepting them because the costly merchant fees have driven them away. All credit cards are good for is driving sane, responsible people to the poorhouse of bad debt.
What’s missing in this rhetoric of doom is that credit cards serve a valuable purpose. This important purpose is the reason that credit cards came into being in the first place – that of solving a temporary, one time cash deficiency in the event of emergency. They were not meant as a tool to spend lavishly on unaffordable luxuries.
An Extension of the Barter System
Credit did not sprout up in modern times but has been around since this country’s founding. In the early days when our ancestors were building this country, there were stores that sold food and supplies to families on credit. The store proprietor would sell the family the needed commodities and record the cost in a journal. This debt was paid back when the crops came in, or the cattle were sold or whatever seasonal occupation the families were engaged in. This worked well for all concerned. The store could rack up sales; the farmers got what they needed when they needed it and paid the debt when they were able.
This credit scenario ended when masses of folks from the primarily agrarian society migrated to the cities for paid jobs. The stores had to change their business model thus marking the end of the credit system. Payment was due at the time the transaction for goods or services was made. For many people, there was still more month than money and should an emergency arise, there would be no cash available to cover it. Credit cards made a come back to solve this dilemma and so replaced the original rural credit system.
Proper Care and Handling of Your Credit Card
In and of themselves, credit cards are nothing but small pieces of plastic with a magnetic strip on the back. How you use them is entirely up to you. Here are three very simple tips for the care and handling of your credit card that will completely eliminate the chances that you’ll find yourself holding a bill for a $10,000 balance you can’t afford to pay:
1) Limit emergencies to GENUINE emergencies, those that cannot wait until payday. Your basement filling up with water because of a busted water heater is a genuine emergency. Use your credit card. Not having the cash to purchase a ticket to the Rolling Stones concert coming to your area is not. Do not use your credit card.
2) Resist the urge to splurge. If you don’t have enough money for it now, there’s an excellent chance you won’t have enough money for it later. Those car seat covers are great, but you’d be better off saving a little bit of money each week and paying cash than putting them on your card.
3) Your checking account should always have enough in it to cover purchases made on your credit cards each and every month. Of course, that emergency plumbing situation will probably require a credit card payment, but that $60.00 blouse on sale? I don’t think so. If you actually did cave and purchase the blouse, immediately upon returning home, take the $60.00 plus the amount of interest, out of your checking account and put into your savings account. Repeat every time you make an impulse purchase on your credit card and you will always have enough money when your statement arrives to pay it off in full.
Credit cards don’t incur debt. People incur debt. Remember, your credit card is a small, innocent piece of plastic. It won’t get you into financial trouble, you will when you use it unwisely.
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