Written by Paul Richard - Institute of Consumer Financial Education, Executive
The purchase of an item that will long outlast the period of debt incurred
to buy it, and that in addition lowers other costs. Example: using credit to
install storm windows and insulation in your home, which in turn lowers heating
and cooling costs.
When the purchase is a necessity and not a luxury.
When it costs no more money to charge.
When it helps your income tax return.
When you may need protection on a repair or a purchase (auto, appliances,
When Credit Cards Are Bad
Constant temptation to OVERSPEND.
Nonessential items purchased.
Impulsive spending increases.
Payments are late or only partially made
When Credit Cards Are Good
Good identification (required for cashing checks and most car rentals).
Safe substitute for cash.
Automatic record keeping.
Consolidates many purchases into one payment.
Saves money when you can take advantage of a good sale.
Orders can be placed easily by mail or phone.
You have leverage against the merchant when a problem arises. Your dispute/claim
will get prompt attention when the merchant knows your payment can be delayed