Credit cards are known to be risky business for some people. If you have trouble balancing your budget every month then taking on a credit card or two should be your very last resort. If on the other hand you are able to balance your monthly budget as well as save regularly then you are probably financially savvy enough to handle the responsibility of a credit card and possibly even use it to your advantage.

Credit Cards – Tips and Tricks

Credit cards do generally have high interest rates on the balance that is left over after the pay period. If you always pay off your balance at the end of every billing period then you may be able to take advantage of the credit card. This is a huge convenience if you are short on cash just before pay day or if you have a big expense that your checking account cannot cover. It might usually take time to gather up the funds for that large purchase and if you pay off the balance when it is due then you have basically gotten yourself an interest free loan. You can look at it as a free loan from the time you made the purchase up until you pay it off. If the loan period is maximised then you could, in practice, get a 55 day loan without any interest.

You can have your credit card provider take the balance due directly from your savings account each month. Bypassing the tedious chore of transferring funds each month, you have essentially created an interest free form of cash available to you at any time. Any big surprises can be handled with the swipe of your plastic but this is all assuming that you can keep enough in your savings account to handle those payments.

If you are able to keep this balancing act going for long then you can take advantage of the incentives that some credit cards have such as points or cash back programs. A credit card with a good points program usually has a yearly fee. The fee can be outweighed by the big gains that can be made if you play the points game well. Having all of your purchases funneled through a points reward credit card can quickly grow your flight credits or give you big cash back returns. Some credit cards can also offer insurance on purchases. Even though all forms of credit including credit cards have risks, with discipline, the advantages can outweigh the risks.