by: Debbie Dragon

Ever stand in a check-out line and find yourself faced with the decision of whether or not to pull out your credit card or just use cash or a check? It is much easier to pull out the credit card and deal with the outcome of that decision later. Is it not? The quick mental exercise goes something like this: cash is better left in your wallet for very small purchases, and checks take too much time to write and process.

However, if you stop and think about the consequences of your decision before you are in the check-out line, you can save yourself some money. Ask yourself several questions before you leave for the store. First, are you current on your credit card payments and accounts? Second, even if you are current, what is the balance on your credit card account? Is it nearing the limit? If you are current on your payments, and you can pay off your balance on your credit card before the due date, then using your credit card is a good idea.

If you cannot take this approach, then you should opt for either cash or check for your purchases. Here’s what this decision can save you:

Charges and Fees. There are many ways for the financial institution to make money on credit card holders. It is imperative then for users of credit to read the fine print on any credit application to determine what the charges are and how they will be figured. Let us enumerate just a few: late fees, over limit fees, cash advance fees and the like. These can add up quickly and soak up income that is better used in other places in your budget.

Look at it this way: every time you make a purchase on your credit card, and you are border line in terms of payments, etc, you will drive up the price of what you are purchasing by paying fees later on. So, that good deal that you think you just got, turned out to be not such a good deal after all.

Interest Rates. The interest rates charged are based on your credit score. So, again, you are paying a higher price for what you are purchasing just by adding on the interest every month. Headache Factor. Keeping your credit card accounts and balances straight can be a time-consuming and frustrating exercise. Unless you are very good at organizing things like this, you’re better off limiting yourself to lower use of your credit cards, as well as limiting the number of credit cards that you have in your possession.

This is not to say that the use of credit cards is evil. Those who make an effort to keep their accounts in good standing benefit from not only strong credit scores, but also they are able to take advantage of credit card programs like discounts on airline tickets, hotels, car rentals, etc. When used responsibly, these are nice perks to have at your disposal.

All negative effects of credit card usage can be avoided by using them wisely and paying off the balances on or before the due date each month. Also, using credit as a means to “float” between income flows (paychecks, etc) is wise as long as the above principles are not violated.

Remember that you are in charge of your credit card usage. No one is forcing you to use them, so make the decision to use them wisely. You can enjoy a successful relationship with a creditor providing that all rules and standards are followed in the smart use of credit.

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