Should you get a credit card just because you qualify for one? While some people advocate taking advantage of credit card offers to build a credit history, others urge consumers to avoid credit cards at all costs. Whether credit cards are good or bad for your situation depends upon a variety of factors.

Reasons not to use credit cards

Consider some of the following reasons why you should avoid credit cards.

1. You can’t afford to pay existing monthly bills, but think it’s time to get a credit card. Filling out a credit card application at this point would be pretty dumb. Think about it: If you are having trouble managing your finances now, the situation is only going to get worse if you add another monthly payment on top of that. Get your spending habits under control by putting together a budget and/or finding a way to increase income.
2. You have mounds of credit card debt you can’t defeat. Put together a plan to pay off this debt to improve your monthly cash flow. Depending upon the situation you may need to talk with a credit counselor to get bills under control.
3. Your credit it shot. Bad credit can keep you from getting a mortgage or qualifying for the best interest rates if you get approved to borrow money. Your credit report can also affect insurance quotes, job offers, or your ability to rent an apartment.

Reasons to use a credit card

1. You pay the credit card bill in full each month. Responsible credit card use can work to your advantage if you want to accumulate rewards points or other perks.
2. You don’t want to carry a lot of cash while traveling. Credit cards are accepted in many establishments around the world. Just make sure you ask credit card companies about any fees associated with foreign currency, out-of-network ATMs, or other services. You can find a list of credit card without foreign transaction fees here.
3. You want to purchase items online. If you don’t want to keep a huge credit line on a card used this way, consider asking for a card with a limited amount of credit that covers just what you need to spend.

Credit cards can be useful financial tools given the right situation. For many people, however, it’s best to avoid taking on a lot of credit card debt without a plan for paying it back.

Published 12/13/12