You’ve probably heard a lot about people getting in trouble from misusing their credit cards. It might have even happened to you at some point, probably by accident.
Yet, credit cards are so convenient that nearly everyone seems to have them now. So, you might be wondering,
Is it really so bad to use credit cards for everything?
Is paying bills with a credit card OK?
The answer to both of these questions is "maybe"--as will be discussed in the paragraphs to follow.
It is not hard to get a credit card of some kind, and in this day and age, and an adult probably would be inconvenienced without having at least one. They are ubiquitous and very useful. Sometimes, it seems like certain things just require a credit card, such as:
You can live without a credit card, though:
The question is: do you really want or need to live without a credit card? The answer (for most people) is, not if you manage your finances meticulously--regardless of your life situation.
Everyone is at a different life stage and income level, so how and when to use a credit card will vary from one person or family to another. However, there are some aspects to credit card use that make good sense for just about everyone.
Not paying your full monthly bill and allowing the interest to accrue, and accruing more and more, only adds more debt until you are completely under water.
LaToya Irba of The Balance lists "10 Ways to Avoid Credit Card Debt." She includes some helpful basics, such as:
Most of these, along with other points she lists, are obvious to nearly any of us, yet we continue to ignore our own better judgment and do them anyway. The last, "avoid cash advances," is particularly worth calling attention to, though.
Irba says, "a cash advance usually is one of the early stages of credit card debt." She explains this in more detail in a different article, "Why You Should Avoid a Credit Card Cash Advance," which is a must-read for anyone even thinking about doing this.
It used to be that many people did not have even one credit card. At an earlier point in the lifetimes of many people alive today, it took a lot to be approved for a credit card. Now, of course, they're everywhere!
If you suspect you've been a victim of credit card fraud, call the issuing bank right away, so they can freeze transactions on the card. You also should check your online transaction log for anything that looks suspicious.
It's a good idea to check this log regularly, no matter what, to monitor your own spending patterns. With credit cards, it's easy to forget all the things we've spent money on.
For the financially responsible adult, there's really no reason not to have a credit card. Just pay attention to the total number of credit cards you have, and how you use them. For more information and insight on this, check out an article by Tamara E. Holmes in credit cards.com.
One reason to have a credit card is simply because you can have one. If you're able to manage your finances well, why not enjoy the rewards and conveniences of a credit card. If you need a card that helps you budget wisely and limit your spending, though, consider a debit card instead.
The convenience factor has to do with a credit card being little plastic card that is lightweight, fits in a small space, and can pack a big punch.
Convenience begins with pulling out this tiny item, swiping it in a machine, and walking away with your purchases. Contrast this with fumbling for money in a wallet, counting it, handing it to a cashier, the cashier making change, and so on…
The "big punch"? Many credit cards offer rewards for using them to make purchases and pay bills, especially for consumers who have demonstrated their financial solvency. Rewards come in the form of cash, gift cards, or credit toward spending at whatever merchant has sponsored the card.
One could argue that credit card points complement the "sale every day" ethos that has invaded retailing, whereby you have to wait until a product has been discounted if you want to pay what it's actually worth. A lot of people will buy things just because they're on sale.
We've been socialized to wait for items we desire to go on sale--because we know they will. We also know that full-price items are seldom worth the money. Similarly, we've been socialized to select credit cards that offer points, cash back, and other rewards for spending.
How do the banks that issue credit cards manage to give consumers these rewards? Take a look at this explanation from Investopedia writer Adam Hayes.
So can you pay bills with a credit card? You probably can, but not if you're thinking, "I can't pay my bills, so I'm going to start putting them on the card." In other words, if you can't pay your bills, switching to credit cards as a means of payment is only going to make the problem worse.
In other words, Knowing how to pay bills with a credit card is important.
In another article, Irby discusses "Using a Credit Card to Pay Monthly Bills." Among her suggestions for this are:
Like using credit cards in general, using them to pay bills regularly has advantages and disadvantages.
Natalie Wise, a writer for Forbes, offers a list of pros and cons to auto-paying bills (with a credit card or through other means, such as a direct bank transfer). There is no doubt that this is a convenient way to pay, she says. It also can do some damage, though--as discussed below.
When planned carefully, auto-pay eliminates things like paper envelopes and forms, stamps, and trips to the mailbox. It also helps people with budgeting, thereby leading to possible savings and healthy credit scores.
When thinking about points and rewards, consider bill-paying to be a source of extra cash or the equivalent of cash. After all, the bills have to be paid, no matter what, so why not get something back for the payments you make?
The biggest problem, though, especially at the start, is simply forgetting about the auto-pay and allowing yourself to become overdrawn. After all, if your paycheck arrives through direct deposit--as most now do--it's easy to have all your money on auto-pilot, which is not a good place for it to be.
Another drawback, Wise explains, is that you can wind up paying for things you no longer use. Most of us probably have had subscriptions to things we became tired of and forgot about--magazines, meal delivery kits, "food-of-the-month" clubs, and so on.
Using auto-pay effectively means, as we've mentioned before, being a responsible manager or your or your household's finances.
Increasingly, we're moving to a "cashless society," where people will casually leave on a long-distance trip with no actual cash in their wallets--just their credit cards. Who would have risked this even a few years ago?
Nonetheless, as you're planning for the convenience and benefits this life might offer as it grows even more complex, it's extremely important to maintain careful control of your personal and family finances.
Whether you plan on paying bills with a credit card or just using one for everyday purchases and payments, choosing the right one (or the right alternative) is more important than ever before.
If you are getting your first credit card or want a new one, look for one that offers the best value and meets your needs. There are services available that will help you make the selection, so please consider using one of them.