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When to use your credit card

By Kemberley Washington · Bankrate.com
Wednesday, September 25, 2013
Posted: 5 pm ET

In today's society, using credit cards has become the norm. The average consumer carries $4,873 of credit card debt, according to a study by TransUnion.

But when should you pay with plastic? And when is it better to avoid using credit cards?

Use cards to build credit

When used wisely, credit cards can be a great way to build your credit. Paying your bill on a timely basis, keeping a low balance and establishing a long-term payment history can help boost or build your credit score.

But be careful. Review the terms and agreement before signing on the bottom line. Seek credit cards with:

  • Competitive interest rates.
  • Few or no fees.
  • Good rewards programs.

Avoid day-to-day spending

Avoid using credit cards to make ends meet from day to day. Swiping plastic too often can lead to personal financial troubles down the line.

If you find yourself relying on your credit cards, re-evaluate your financial plan. Commit to a budget and get an understanding of what you can or cannot afford.

Cut back on expenses that may not be necessary for day-to-day living. Also, consider seeking financial counseling to help establish a financial plan that works best for you.

For the love of money

If you truly are disciplined, using credit cards for the rewards offered can be a great way to help save a few dollars here and there. Many credit cards offer great rewards as a percentage of every dollar you spend.

However, if you are not a disciplined person, you may be unlikely to pay your card in full monthly. In that case, not only will a rewards card fail to save you money -- it can actually prove more costly.

Kemberley Washington is a certified public accountant and business professor at Dillard University. She writes a personal finance blog at Kemberley.com. Follow her on Twitter and on Facebook.

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