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Can You Handle It?

I will admit, there are times when a credit card does offer some benefits (if you do not remember or understand the difference between a credit card and a debit card, revisit last week’s post).  Here is the disclaimer: credit cards are not for everybody.
REMEMBER: Having a credit card for “emergencies” is a HORRIBLE idea. You don’t need your emergency to cost four times what it should have (again, check last week’s post). You need an emergency fund for emergencies.
ASIDE: Anybody like to guess the subject of next week’s post?
FACT: When using a debit card at a hotel, they will often freeze the cost of up to three nights charges and won’t release that money for several days, EVEN IF someone else (like your work) is paying the bill. If you live paycheck to paycheck, this might be a problem. If you carry a large balance in your checking account, this is not a big deal.
FACT: Many credit card companies offer rewards. As far as I am concerned, this is the ONLY benefit to using a credit card. However, using this kind of card does not mean you can toss your budget out the window. You are NEVER allowed to over spend; you can only use the credit card like a debit card–only spend the money if it's already in the bank. And rewards cards usually carry a yearly fee that you need to budget for.
Let me share what works for me.
I have a credit card that has a yearly fee of $69 and provides me with air travel with Southwest. I have imposed a very low credit limit on myself–it's only $4,000. And, I only charge on that card what I have money in the bank to spend. I do not go on shopping sprees or out to eat if I have not budgeted for that. I also pay off my balance the very next day with the money I have set aside in my checking account for those purchases.  Online access makes this a no brainer.
FACT: Cutting up a credit card with a pair of scissors does not make the bill go away. But, at least you won’t keep using it.
HOMEWORK: Choose one credit card to keep, and shred the rest. You are keeping this sole credit card for hotels, rewards, and to be used as a debit card that goes hand in hand with your budget. If you don't think you can handle that, go ahead and shred all of them!

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