Acceptable Uses Of Credit
Written by Paul Richard - Institute of Consumer Financial Education, Executive
- Home mortgage
- 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
- Facing bankruptcy.
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