How a Credit Card Can Be Your Friend

We have all heard countless stories of people over their heads with credit card debt-maxing out every card they own, then only being able to afford the minimum monthly payment. High interest payments shackle people to their debt for years, not to mention the significant income drain the finance charges have on their families.

It is unfortunate that many Americans must live with this reality, since with some financial discipline, this delimma is avoidable. When a spending plan is developed and followed, a credit card becomes no more dangerous than any other form of payment.

When credit card bills are paid in full each month, credit card fees and finance charges do not accumulate. With a little extra bookkeeping from a spending plan, a credit card is transformed from being a burden to a very rewarding financial partner-since it provides the following advantages over other forms of payment:

· Rewards Programs.

Many credit card companies offer loyalty programs to reward those customers who use their cards more. Rewards usually come in the form of points or cash. Depending on the company, the points can be redeemed for things like restaurant gift certificates, hotel stays, airfare, vacation packages and more. Cash cards typically pay a 1% rebate on your purchases, which makes for an extra $180 a year on monthly spending of $1,500. This level of spending is easily achieved by putting all your purchases on a credit card (including utility bill payments). There are even cards that pay more than 1% for particular types of purchases like groceries or gas, such as Citi's Dividend Platinum Select card.

· Perpetual 0% Loan.

When you use a credit card, you are using the bank's money to pay the store instead of yours-for free. While you're waiting for your statement to arrive, your money can continue to work for you in an interest- bearing account, such as ING Direct's Orange Savings. Unlike a debit card that continually reduces your account balance, using a credit card preserves your entire bank account balance for earning interest until your statement's due date. That's an extra $35.25 a year based on a $1,500 balance at today's rate of 2.35%*.

· Fraud Protection.

If your credit card number is used fraudulently, by law your maximum liability is $50. This is not true of a debit card. A perpetrator can easily use your debit card as "credit" transaction in retail stores or online. This type of transaction does not require a PIN number to be entered, and is especially dangerous since a thief can clean out your entire bank account in short order.

· Loss Protection.

Unlike cash which is gone for good if lost, a credit card can be replaced within days of reporting it to the issuing bank. In the meantime, you're protected against unauthorized use by anyone who finds the lost card.

· Warranty Coverage.

Many MasterCard credit cards warrant your purchases above and beyond that offered by the product's manufacturer. Your purchases made with one of these cards get an extra level of protection for free. See MasterCard's website (http://www.mastercard.com) for the full scoop on their coverage terms.

· Purchase Protection.

Another benefit MasterCard offers on most of their cards. With their Purchase Assurance plan, your purchases are automatically insured against damage or theft for the first 90 days, also at no additional cost to you.

With all of these benefits over other forms of payment, credit cards can easily become your favorite way to pay. Instead of dreading your credit card bill each month, it can become a pleasant reminder of your money mastery.

Copyright 2005, Jim Hood

Jim Hood is senior contributing editor at the Discount Shopping Service Guide. He frequently writes credit card offer reviews and articles on money-saving strategies for shopping online.

* Rate quoted from ING Direct on January 4, 2005.

---

Warning: Free Credit Report Imposter Websites Springing Up on the Web

A recent amendment to the federal Fair Credit Reporting Act... Read More

Student Credit Cards

STUDENT CREDIT CARDS With graduate debt averaging... Read More

Credit Report Secrets: Do You Know What They Reveal?

If you've ever applied for a credit card or loan,... Read More

Credit Cards -- What You Should Know

There are a lot of questions about using credit cards.... Read More

Identity Theft ? How Can You Prevent It Happening to You?

The nightmare of identity theft strikes an estimated 750,000 people... Read More

Credit Card Incentives

Credit card companies want your business. After all, lending money... Read More

Bad Credit? No Credit? Yeah, Its a Problem.

Many companies use the slogan "Bad Credit? No Credit? No... Read More

Ethical Finance: Who Benefits From Our Spending?

On one hand consumers are being universally criticised for running... Read More

Credit Reports ? Why Your Credit Score is Important

If you have never heard of a FICO score before,... Read More

Winning The Credit Game!

Everywhere we go, the word credit can be found, shining... Read More

Give Yourself Credit

The Beginning of the Credit Card EraIn 1951, Diners Club... Read More

Important Things to Know About Divorce and Credit

Joint debts remain joint debts.Both spouses signed a legally binding... Read More

5 Surefire Ways To Eliminate Credit Card Debt

Do you have enormous credit card debt? You are certainly... Read More

Understanding the Process of Credit Counseling

Many of us have seen the advertisements on television. "Get... Read More

Credit Cards for Home Business

It is wise for you to have a company credit... Read More

Credit Cards - Why Prepay?

With prepaid credit cards, you get the practicality of plastic... Read More

Credit Report Disaster Through Mistaken Identity

I've got some very important info I want you to... Read More

Credit Scoring: What You Dont Know Can Hurt You

You've probably heard the term credit scoring. You may have... Read More

Credit Repair Companies and Credit Counseling

Let's be crystal clear, right up front. Paying someone to... Read More

10 Simple Steps to Manage Your Credit

By far the greatest invention the banks have ever come... Read More

Good Credit Is Not A Good Reason To Borrow More Money After Youve Achieved Financial Freedom

The most important thing for you to remember is that... Read More

SuperCharged Secret 4, Credit Card Utopia

YOU SCRATCH MY BACK, AND I'LL BUY SOME MORE BEER!Let's... Read More

Consumer Credit Reports

A consumer credit report is a factual record of an... Read More

Guide to Credit Terms

Listed below is a useful guide to credit card terms.... Read More

Saving Money with Credit Cards

Having a credit card is a wonderful convenience for those... Read More

10 Tips To Prevent Credit Card Fraud

Imagine opening your credit card statement one morning and discovering... Read More

What is Credit Card and Debit Card Blocking?

Have you ever been told you were over your credit... Read More

Myths and Truth about Credit Scoring

Credit score is the key factor determining approval of almost... Read More

Online Credit Report and Online Credit Reports

Online credit reports are easily accessible to those interested in... Read More

Recognizing the Signs that You Might Need Credit Counseling

Most families in America today have a credit card; some... Read More

What You Need To Know About Credit Cards

What is a credit card? A credit card is... Read More

ChexSystems: Who They Are and How it Affects You

ChexSystems is a company that maintains a subscriber membership service... Read More

Dealing With A Collection Agency

Step I - Selecting A Collection AgencySelecting a credit collection... Read More