When You Should and Shouldn't Purchase with Plastic

Unbiased Financial Information Provided by Financial Finesse

Americans are up to their necks in debt. Bankruptcy has become so commonplace that in October of 2005, the government made it harder for people to file. You might blame our love of credit cards for the financial predicament we've gotten ourselves into. But that doesn't mean everyone should just stop using credit cards entirely... just that they should use them carefully. In fact, there are some very good reasons to use credit regularly.

When Should You Charge It?

In general, it's a good idea to have at least one credit card and to use it to establish a positive credit history.In general, it's a good idea to have at least one credit card and to use it to establish a positive credit history. Your credit record will be a key factor in your getting approved for a major loan, like a mortgage or auto financing. A good credit history can also help you rent a place if you're not ready to buy.

Sometimes it's actually better to make a purchase with your credit card than with cash or a check. That's because credit cards often come with a special insurance feature that covers you if your purchases are damaged or stolen, which is particularly useful when your new TV arrives from the store with a cracked screen. Check the terms of your card (you can read the application literature or call the customer service line) to see if you have this coverage. Your credit card issuer may also play intermediary if you ever have a dispute with a merchant over the delivery of the goods or services you've bought.

For the most part, credit cards are also considered safer and more convenient to use, especially if you're traveling. Why worry about losing your money or having a personal check rejected when you can carry a single piece of plastic that's accepted most places and can be cancelled if lost or stolen? If you make purchases online, your credit card can provide protection against Internet fraud, too.