When a Credit Card Can Help Your Finances

We often hear horror stories about how credit cards ensnare you with debt, and how the high interest can keep you in financial chains.

If you aren’t careful with your credit card use, this type of situation can be very real – and devastating.

However, like so many things in life, a credit card isn’t evil.

How you use the credit card matters, and that means that you need to be aware of how you are using your credit. vSavvy credit card use can actually help your finances.

Credit Card Rewards: Free Stuff and Cash Back

One of the best ways to take advantage of credit cards is to use rewards programs.

Many credit cards offer ways for you to earn rewards that result in free merchandise, discounted travel, and even cash back.  There are those who receive enough miles each year to fly for free, or who receive cash back each month.

The height of frugality is free stuff, and credit cards can help you with that.

With cash back, you can super-charge your savings goals.  Vacations can be much less expensive with travel rewards.  Shopping perks and free merchandise can save you money on planned purchases.

With the help of credit rewards, it’s possible to get ahead financially in a number of ways.

However, you do have to be careful.

When you carry a balance, that’s when things can get ugly.  Your interest rate offsets any rewards or cash back that you earn.  If you plan to take advantage of credit card rewards, you have to pay off your balance each month if you don’t want to get stuck making high interest payments, and wind up in debt bondage.

Easing Your Cash Flow

The way your money moves through your personal financial system can have a big impact on your situation.

Credit cards can help you smooth things out.

If you use your credit card to make certain purchases, you can be sure that the money in your checking account is free for other items, such as mortgage payments.  Indeed, some find that putting automatic withdrawals on a credit card can ensure that you don’t run into problems of having money taken out of your checking account before your next direct deposit.

Of course, you always need to make sure that your purchases are planned, and that your credit card use fits in with your budget.  You want to create a spending plan that you can stick to.  That way, as you use your credit card, you can make payments and make sure that your checking account doesn’t end up incurring over the limit fees.

However, by the time your credit card statement is issued, you want to make sure that you have enough money in your account to pay off the balance.  The point of using credit cards in this way is to make your money move more smoothly through your personal economy, not to buy items you can’t afford.

No matter how you use your credit card, it’s important to pay attention to your budget, and do your best to pay off the balance each month.


Yes, a credit card can get you into trouble if you aren’t paying off your balance in full or if you are accumulating fees.

But used wisely a credit card can help you with you finances.  It can help with cash flow, purchase tracking, rewards, insurance (like if you rent a car), and more.

What other ways can a credit card help your finances?



Published or updated July 22, 2012.

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