Tustin Finance

Build and Preserve Your Credit Score

Personal Finance to Improve Your Credit Score

Should You Use Credit Cards or Cash?

It’s no surprise that using credit cards is a major convenience. There’s nothing easier than taking out a small card and using it for your everyday purchases. Unfortunately, the ease of using your credit card is also the cause for millions of dollars worth of credit card debt. Because it’s so easy to simply swipe a card and purchase whatever you want, it’s far too easy to let your spending get out of control. Because of this, one of the most important questions a consumer should ask themselves is whether or not they should be using credit cards or cash? While the answer to this question can vary based upon your income and what you wish to purchase, there are several guidelines all consumers should follow.

Knowing When to Use Credit Cards

Credit cards are an excellent financial tool, when it’s used properly. Unfortunately, many people are unaware of how to clearly determine when using a credit card is acceptable. Because of this, there are a few rules you should go by to ensure you’re always making the wisest financial decisions:

You should always take proper precautions in respect to credit card security. “Follow the standards set forth by your credit card issuer,” says SecurityGuardTrainingCentral.com, “and your chanced of fraudulent activity are substantially diminished.”1

You should never use your credit card when the fee for doing such isn’t the most cost-effective option. While you may think paying your mortgage/rent or any other recurring bill with your credit card is a good idea because you’ll earn reward points, this is just not the truth. Because all credit cards feature interest, if you’re unable to fully pay off the balance, then you’ll actually end up spending more money on these essential monthly purchases. Therefore, always pay cash for such bills.

Should you find yourself facing an unexpected bill, such as a medical bill, you should always negotiate with this creditor before turning to your credit card. In many cases, when you contact the billing department for such bills, you can actually have your balance owed reduced – or an interest-free payment plan – which will ultimately save you money in the long run.

If you’re planning on obtaining a mortgage in the relative near future, you should avoid using your credit cards when at all possible because any changes to your credit report can be disastrous when you’re seeking to open a mortgage loan. Resist the urge to make any major purchases and definitely don’t open a new line of credit. Failure to do so can negatively impact your chances of obtaining a mortgage. Moreover, if you’re in the process of having your mortgage application looked over then you should avoid using your credit cards until the process is complete.


Tags: ,

Comments are closed.