by Luana

Created on: April 27, 2007   Last Updated: May 15, 2007

The rule of thumb here is Pay Cash, Avoid Credit! Paying cash is always the way to go but their are situations where a credit card is your only choice of payment therefore in such cases use the credit card and immediately if possible replace those credited funds.

Some situations where a credit card is necessary are

1. On-line/Internet shopping
2. Hotel reservations

3. Flight reservations
4. Some Courses' Registration fees - require credit card payments rather than cash.
5. Donating to 'Distance' Charities
6. Buying Major appliances in-order to get bonuses such as free servicing for a
period of time.
7. Need; an absolute necessity eg. food for your children and have not been
paid as yet.

In the above situations when a credit card is the only accepted method of payment or most convenient at that particular time then do so but ensure that the full amount spent is immediately refunded on to that card since remember a credit card payment is a LOAN. The purpose of a credit card is to create Income for someone else not you.

The money loaned to you is charged a daily interest of about .o5% per day which is about 18.5% per year so the more you borrow/spend the more interest you will pay daily.

-Then should you miss or be late with payments in regards to their due date then there is another fee involved which increases your 'credit amount' even further not forgetting the addition of the monthly interest to that 'credit amount' balance.

-Also your credit score will be adversely affected with neglected payments so that when you really need a loan say to buy a house possibly years later you will be viewed negatively in regards to being given that crucial loan.

-So the "Less is Best Law" is the one to Adapt for use of credit cards.
This Law simply means
-Less number of credit cards.
-Less spending with credit cards
-Less time to have credit on those cards -
Pay as fast and as many payments per month as you can,this will decrease daily percent interest in terms of cash for you.

Well the Real answer to this question is "Always pay cash" if you can afford it and think twice ,thrice before taking out a credit card.

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