As anyone who has ever used one knows, credit cards have the potential to be both extremely useful and somewhat dangerous.  Over the past couple years, however, much of the attention given to these little pieces of plastic has been understandably negative.  People simply lost faith in financial establishments during the Great Recession, and this included credit card companies, many of which routinely used bait-and-switch tactics and unfair penalty rates and fees.  Still, the credit card landscape has changed; issuers are operating under stricter rules and consumers are protected by an expanded, strengthened bill of rights.  So is it safe to rely on credit cards once again, or is it not worth the risk?  Let’s find out.

Why You
Should Use a Credit Card

1. Credit Building

Whether you’re a fan of credit cards or not, you’re probably aware of the importance of a good credit score.  Decision makers from loan officers and mortgage brokers to car salesman and employers rely heavily on consumer credit scores in evaluating applicants.  Do you want to hazard a guess as to the easiest way to build a solid credit history?  That’s right, a credit card, but you don’t even have to make any purchases to benefit. You’ll be considered fiscally responsible as long as you maintain an open credit card in good standing and at zero balance.  If you do decide to make purchases, however, make sure you keep your spending wellcreditcards
below your credit limit and pay your balance in full each month.

2.
Low-interest offers

It’s often impossible to pay in cash for expensive items like furniture, appliances, electronics and cars.  Credit cards not only help you make these big-ticket purchases, but they can also help you save on resulting interest costs.  Many credit cards from issuers like Citibank, Discover, Capital One and Chase offer 0% introductory periods for purchases and/orbalance transfers, which allow you to pay down a balance
interest-free for as long as 21 months.  If you choose to capitalize on one of these offers, use a credit card payoff calculator to determine the monthly payments necessary to pay down your balance in full before the introductory period concludes and high interest rates kick in.

3. Rewards

Would you say no to a free flight?  What about a complimentary night in a five-star hotel?  If you had the opportunity to get cheaper gas, would you let it pass by?  How about a discount at your local supermarket?  No, of course not.  So, the question therefore becomes, why wouldn’t you take advantage of what rewards credit cards have to offer?  Just get a card with generous rewards geared toward your biggest expense categories (e.g. travel, gas, groceries, etc.) and you’ll receive various perks and amenities for the purchases you’d be making anyway.

4. Convenience

Credit cards are convenient, plain and simple.  They’re both less burdensome and less risky than carrying around a bunch of cash, they provide better protection against fraud than do debit cards,
they’re accepted at far more locations than personal checks, and they automatically provide some of the best foreign exchange rates possible.

Why You Shouldn’t Use a Credit
Card

1. Debt

You shouldn’t use a credit card if you don’t trust yourself to spend within your means.  In other words, if a credit card leads you to spend more than you would normally, then you’re not only
spending for the wrong reasons but also likely wasting money on interest costs.  If you find yourself in such a situation, stop charging on your card, pay the balance, and lock it in a drawer.  As long as you aren’t paying annual or monthly fees, this is preferable to simply closing your card because your issuer will continue reporting you as being in good standing on your major credit reports each month.

At this point you can simply use a debit card or cash to make everyday purchases.  Be careful if you go the debit card route, however, since it too is plastic and you might again find yourself spending more
than you really should.