It is too easy to borrow money from others these days, especially using credit cards. Just so it is clear – I am not saying that you should not use credit cards at all. Some experts are adamantly opposed to having a credit card. I do not agree with them. Three good reasons exist for why you should consider using credit cards: they help build your credit score, they enable you to shop online, you can earn points for travel purposes.
I use multiple credit cards all the time
I have one card for daily purchases. The other one is for online transactions. It is rare that I carry around a lot of cash. Quite honestly, there is not much of a need for cash in the modern business world. Instead, I purchase items with my cards and then pay them off monthly.
Credit cards can be dangerous if you abuse them
Banks want you to get into debt abusing your credit cards so that they can charge you high-interest rates to profit from your debt. If you pay off your credit card bill each month, then you will not owe them any interest. It sounds easy, but it is more difficult than you think. I recommend avoiding this trap as much as possible.
Living in credit debt is not good
When we first moved to Northern Virginia, we used our credit cards to buy a lot of items we needed. Moving into a new house is always expensive. I was not diligent about paying off the credit cards. The reality was that I did not have the money to pay off the cards. The debt started to pile up. After a few years, the credit card debt exceeded $20K. I did not have a good plan to pay off the debt, so I took what seemed like a radical, but a necessary step at the time. I refinanced the house to pay off the credit cards.
Watch how much you spend
It is very easy to overspend a credit card. Most have limits that are usually higher than what you will earn in a month. Stores want you to buy stuff, so don’t rely on them to ask you if you really need to buy that extra item. You need to ask yourself that question…before you swipe the card. Do I really need this item? If the answer is no – put the card away and walk on.
The rich rule over the poor and the borrower is a slave to the lender.
Proverbs 22:7
I am Doug Keating and this is my letter to sons.