Credit Card Rules

Like any tool, Credit Cards have a proper and an improper use. In the wrong hands, a useful tool can be a destructive force. But that same tool, in the hands of somebody that knows how to use it properly, can be wielded in a very positive way.

And while there are experts out there that will tell you to ceremoniously discard your current collection of plastic, the fact remains that credit cards can be very useful tools when used properly (establishing credit, convenience, etc).

In fact, when it comes to the “to use or not to use” credit card debate among personal finance experts, I find it useful to reference the popular saying “Guns don’t kill people. People kill people”. Does the same logic apply to credit cards? Will irresponsible people find a destructive use for guns, credit cards, as well as a host of other items?

As part of CatholicPF‘s ongoing effort to promote healthy personal finance habits and courtesy of the Council for Common Sense, I am publishing the following public service announcement:

The Ten Do’s & Don’ts of Credit Card Usage

  • Do call all of your Credit Cards this month and ask for a lower interest rate
  • Don’t carry a balance from month to month
  • Do pay your bill on time every month
  • Don’t carry your credit card(s) in your wallet
  • Do read the small print on your current/future accounts
  • Don’t use cash advances under any circumstances
  • Do take sensible advantage of low/zero interest Balance Transfers
  • Don’t close your accounts
  • Do set up an online account
  • Don’t cosign a Credit Card for somebody else (yes, this includes family)

And while you will often hear elected officials tow the populist line of feigning outrage at the “predatory practices of Big Banks and Wall Street” (you know, those guys that came and banged on your door and told you to buy more house than you could afford and charge that vacation on your credit card without concern for the 16.5% APR), I think the Council of Common Sense is suggesting an alternative narrative: a narrative that emphasizes self-control, personal responsibility, and financial discipline.

Some might suggest that if more Americans spent the same amount of time and effort learning about and understanding credit cards, mortgage options and investment opportunities as they do voting for American Idol contestants, updating their Facebook pages, and discussing the most recent episode of Real Housewives of Atlanta, they might currently be in a much better financial position.

What say you?