Finances: Credit Cards

Credit cards are a very dangerous thing. There are numerous stories of people falling into huge debts that they are unable to pay off because of credit cards. The problem with spending money with a credit card is the same issue as firing a gun, you're not close enough to the end result to feel the effects right away.

With a gun, if you shoot at a target, you could be a large distance away which diminishes the magnitude of the damage you've caused with it. However, with a blade, you are up close and personal with the target and can feel the results of your efforts.

The same is true for spending money. Using credit cards does not produce any side effects right away. You can still go on spending money and not really see it leave your hand. However, spending cash is different. When you hand over your money to the cashier, you can see the money leaving your possession in sobering detail. I don't think anyone especially likes that.

Credit cards can be dangerous, but when used properly, can make your life better. The first rule of thumb is always payoff your balance every month. Credit cards make their money off charging interest on balances that are carried over. Second, sometimes it's helpful to have special cards. Some stores will have promotions for their store card to give discounts or months without interest. In these situations, You can get the card temporarily, pay off the card, and then cancel it to take advantage of the benefits. One other cool thing about credit cards is that most offer some kind of rewards program such as points or money back. Call your card company periodically to see if they have any special promotions. Never use a credit card that has no reward in it for you.

If you manage your credit cards right, then your credit history will be great! Now you have the power!