Credit Cards

Credit Cards

Are credit cards the root of all evil? They can be--if you're not careful with them.

Credit Cards are Convenient

Yes, credit cards are convenient. They come in handy when your car breaks down, you're out to dinner with friends and don't realize you forgot to get cash, you have to by a last-minute gift, you have to book a flight or a hotel room or rent a car...the options are endless. But that's usually the problem. The credit card companies give us high limits--usually more than we need and certainly more than we can afford to pay off in full in one month if we rack up a lot of debt. It's at this point that credit cards become evil.

But are credit cards to blame, or is it our lack of self-control when using them? People love to have freedom, and that's what credit cards represent to a lot of people--the freedom to do or buy anything they want or go wherever they want, whenever they want. Many people love to live the excess lifestyle, and a lot of people do it on credit.

If you want to keep your credit card spending under control instead of letting your credit card debt control you, keep these tips in mind:

• Freeze 'em. That's right--put your credit cards in a glass of water in the freezer. That way, before you make an impulsive purchase, you'll have time to think about it. By the time the water melts, you might decide that you can live without whatever you wanted to buy.
• Set goals. Saving for a house? A car? A trip? Cut out a picture from a magazine or catalog that reminds you of your goal, then wrap your credit card in that picture. Then every time you use the card, you'll be reminded of your goal and possibly spend less.
• Be on alert. Some credit card companies have a service that will alert you when you've gone above a certain balance that you designate. This allows you to keep tabs on your spending.
• Match yourself. Make a deal with yourself that whatever amount you spend on your credit card you will match by transferring that same amount to a savings account. This way, you'll have the money to pay the bill in full at the end of each month. Also, transferring money all the time might turn out to be enough of a hassle that you'll just start paying cash. (And that's actually a good thing because when we buy things with credit cards, we tend to spend 30% more!)
• Skip the convenience. Some credit card companies are now offering credit cards that can fit on your keychain. This just makes it way too easy to spend though. And what happens if you lose your keys? Anyone who finds them can use your card. Stick with the cards that fit in your wallet.