Using Credit Cards Wisely

Not all plastic is bad. There are good reasons consumers may choose to use credit cards. Here are some things to keep in mind to help you use plastic responsibly.

Why credit? With millions of Americans in debt and credit card interest rates at high levels, many experts advocate a complete ban on the use of consumer debt. But if used responsibly, credit can be beneficial in areas such as providing individuals with improved cash flow, opportunities to earn rewards, and chances to establish or improve credit.

When to open a new card While every department store will entice you to open a card to “save 10% today on your total purchase,” too many of these cards will damage your credit. Instead, only open a new card after doing research about the benefits it will provide. For people trying to establish their credit, opening a credit card account is a typical way.

Limit use of new cards In general, you shouldn’t have more than one or two major credit cards. They should be paid off in full and on time each month. They should not accumulate a balance. Find a card that provides rewards you value such as cash back or travel points.

For more financial help and advice download the 2011 Kentucky Living Financial Planning Guide.