Credit cards can be your best friend or worst enemy, depending on how you use it. Credit cards are designed to actually help people with their finances. Problems only arise when they are misused.
How does it become your enemy?
Spending money can be very addicting especially when you only use credit cards to purchase items, order food, travel, and pay bills. You get to buy things that you want even when you have no money in your pocket. However, there is a fine line with the use of credit cards. You need to pay what you have spent so your account won’t be smudged with a bad credit history. And you know what happens when you have a bad credit history.
Your job, loans, insurances, properties, and even your business can be put to risk. You will be seen as someone irresponsible in handling money and so, no one will trust you in the future especially with lending funds that you need. Your properties can be forfeited and your business can be shut down. You will have all sorts of problems with getting a job just because of the teeny-tiny mark on your credit account. In fact, misuse of credit cards can lead you to bankruptcy, imprisonment, and lifetime financial constraint.
How does it become your best friend?
There are a whole lot of rewards that you can claim through the use of credit cards. And these benefits can be even bigger when you know how to control your spending. Reward cards and cash back are only a few of the examples on how you can extend the use of your credit card. It enables you to have freebies and extra money to spend on food, gas, hotel and ticket booking, and other basic necessities.
However, to make credit cards your best friend, you must always treat them only as an assistance to your finances when you don’t have any cash with you. It should not be your ultimate source of money and you should always pay back what you have borrowed.
Be diligent to pay your credit card bills and be on time so you won’t get premium interest rates for the delay. Monitor your score frequently and make sure that you can still make up for what you have spent.
Lenders and banks will be pleased to give you low-interest rates if they see that you are a low-risk investment.