When I Think it is OK to use a Credit Card

December 7, 2011 at 8:03 am 1 comment

If you follow Dave Ramsey’s style of money management, than it is never ok to use a credit card.  I think if you are a person who has a hard time keeping your spending under control this is the rule to follow.  In fact I think it is the rule to follow most the time.  I remember when I was in college as a graphic designer and I wanted to buy an apple lap top, my parents told me never buy anything you don’t already have the money for.  I thought “well that’s no fun, then why do I have a credit card at all!” I bought the lap top anyway and only paid the minimum payments of $35 at 19% interest on an item that cost me $2700.  I was taking my first steps to being in debt the rest of my life.  That was not my only credit card purchase but  thankfully I got a good paying job the following year and my husband and I both thought it important to get out of debt before we got married.  Only then did I start to see the trap credit cards can create.

So now that I am all responsible with money – when do I use a credit card? Only if it is something I already have the money for.  (It’s amazing this pool of knowledge you discover your parents have when you grow up.) Then why use a credit card?  My  most recent example is Christmas.  I have a certain amount of money I have been putting aside each month the entire year to save up for Christmas.  This way I know what I have to work with. No matter what, I can’t go over this amount of money.  Period.  Since we live in the middle of nowhere I have to do most my shopping online and I don’t want Nathan to see where I have been shopping or else he will know what I got him. So I chose to use my credit card. I have been keeping a little log of where I have spent Christmas money and I have not gone over.  Important Note – Since I already have the money for everything I put on that card, it gets paid off on the first bill so there is NEVER an interest fee.

Another example was when Nathan took me on my birthday trip to Seattle.  He had a set amount of money we could spend in his head already, knowing it was what we could afford, but most that money was coming from the paycheck he was going to get while we were on vacation, so we put all our expenses on the card and paid it off immediately when we got home.

One my mom use to do was use a Macy’s or JCPenny’s credit card just to get the extra discount the sale gives you by using it.  (They give that extra discount because they expect to make more money off of you by collecting your interest payments on your card.)  Then when we were done shopping she would go back to the area where you can make a payment on your card and pay it off before we left the store.  So she pretty much paid cash but got the discount for using credit.  That is working the system.

So that about sums it up.  I think it is OK to use a credit card if you use it in a way where you never have to pay interest.  That means you can afford what you buy.

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Entry filed under: Budgeting, Frugal Living, Wendy's Posts.

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1 Comment Add your own

  • 1. Aimee  |  December 7, 2011 at 9:47 am

    I often use a credit card for my purchases just so I can get air miles, but I have never left debt that collects fees! I hate paying a membership fee for these credit cards, but it is worth it to me in the end with how many miles I collect.

    Reply

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