Credit card debt is deadly. We know that. It's hard to dig out from under it -- though it can be done. (Visit our friendly Credit Center to access lots of free tips on getting out of debt, shocking insights into the credit card industry, and guidance on how to manage your credit effectively.)
As some folks dig out, they are often (quite reasonably) inclined to just cut up their cards and switch to using only cash. Many other people who simply don't like credit cards have the same impulse. But think twice -- cash isn't unilaterally better than plastic.
Sure, with cash it's hard to spend more than you have. If you've got only $100 in your pocket, the store just isn't going to give you that $300 digital camera. That's a plus, and a big one. But there are many pluses to credit cards, too:
- They're handy for buying things online or over the phone. Sometimes credit cards are required, such as when you rent a car.
- They're handy when buying big-ticket items, as they let you avoid walking around with thousands of dollars in your pocket. They're handy for small-ticket items, too. Businesses such as McDonald's
(NYSE:MCD), Yum! Brands (NYSE:YUM), and Wendy's (NYSE:WEN)welcome your plastic.
- Many cards offer extra consumer protections when you buy things with them.
- Your liability in an instance of fraud with a credit card is $50. It's anywhere from $50 to hundreds of dollars or more with debit card fraud, depending on how soon you report the incident. But if some dastardly type gets his hands on your cash and spends it, well ... sorry, friend. You're most likely out of luck.
- You can build a good credit record by using credit cards responsibly. This can help you snag the lowest available rates for mortgages and other loans, potentially saving you tens of thousands of dollars. (Let us help you check your credit record and fix the boo-boos that very likely exist on it.)
- When you use a credit card, you end up with a handy record of your purchases. This can help you figure out exactly where your money goes. (Of course, some people would rather that such records didn't exist. In such cases, cash prevails.)
A recent Knight Ridder article by Andrew Shain presented American Express'
The bottom line is that for those with enough discipline to not charge more than they can afford to pay, it's hard to beat the convenience and other benefits of credit cards. Aim to pay your card bills off in full each month, and charge away. (Check our credit center to make sure you have the best card for your needs.)
These articles may also be of interest:
- Credit Cards Sabotaging Mortgages
- Beware of Canceling Credit Cards
- $24 Billion to Card Companies ... for What?
- Sneaky Credit Card Tactics
- Do You Want to Work Forever?
- Get Rich by Beating the Odds
Longtime Fool contributor Selena Maranjian does not own shares of any companies mentioned in this article.