Credit cards are a double-edged sword. People are addicted to the plastic crack. They buy things they don’t need to impress people they don’t like. Plastic money has Americans hooked. Card ads are everywhere. How bad is it? By some statistics, the average American household has more than $ 15,000 in credit card debt.

I am not arguing that everyone should have a credit card. If you can’t control your cash, you definitely can’t control your plastic spending. I teach Financial Peace University and we strictly preach debt freedom and get rid of your cards. Why? Because most people spend when they carry a credit card. Also, those same people will not pay their current charges and will keep a balance. Hence, putting them back in credit card debt.

There is a myth that you need credit. That is a lie. You don’t need credit to survive. It makes it easy to travel, rent cars and book hotels. But the truth is that you can do it with a debit card. The buy now, pay later syndrome is the reason so many people are in debt. This is how people get trapped and headed for financial disaster.

Only the responsible and disciplined

I use my cards every day. But I pay my balance every month. Paying interest is stupid. I still think that most people should not own or use a credit card unless they are responsible and disciplined to pay it off every month. As I mentioned earlier, if you can’t control your cash, you’ll be worse off with credit cards.

Listen to me again Paying interest for the things you buy is stupid. If you can’t pay the balance, don’t buy the damn thing. Do you really need it anyway? Is that new big screen necessary now? Or is happy hour so important? Think before you take it out. Better yet, leave it at home.

Not suitable for emergencies

They should not be used for emergencies. This is an excuse that people use because they are not financially prepared. What are emergencies? The tire blew out, the air conditioner does not work, the children need new shoes, you are hungry and it broke. You take out your plastic to pay for these things and then you start to accumulate that balance. You do not pay the balance and the following month another “emergency” appears. If you don’t have an emergency fund, you are setting yourself up for failure.

Here are 4.5 ways to actually use your credit cards:

1. To do that $$$

Wealthy people use cards to expand their businesses. They use it to make money. Here is the key! They pay off their balances at the end of the month. They generate income with their cards and then pay it off. They hate paying interest. I am an affiliate marketer and I use my credit cards for marketing and pay the balance every month.

There is a daily limit on the use of your debit card. But not with credit cards and I don’t need limits on my spending. My credit cards help me earn money. If your plastic can help you increase your income, use it by all means.

2. Not for personal use

If you can’t pay the balance at the end of the statement, don’t buy it. If you can’t buy it with cash, don’t buy it. I know you will pay for it later. If that were true, you wouldn’t be floating all this credit card debt. Don’t even take it with you. Just having it will make you want to buy things. Things are what kill people financially.

Bankrupt people pay fees and interest rates because they cannot afford to buy with cash. Those are the consequences of not having enough money to buy what you want. Fees and interest add up. You are simply giving away money when you cannot pay it off before the statement date.

Here is a trick that I use. I always have a monthly budget. I know where every dollar goes. I take that budget and put it on my credit card. In fact, I create a positive balance on my cards. So I stick to my budget and never owe a balance. Why am I doing this? You’ll see when you read the n. 4.

3. Your personal accountant

That is why I use my credit cards for every purchase. I receive a statement at the end of the month, quarter and year. I see where my money went and they also add charts. I download the statements into my Quick Books software and give the year-end statements to my tax collector. Boom accounting is done.

4. Benefits, privileges, rewards and points

The icing on the cake is all the benefits, privileges, rewards, and points you get from using your cards. I am a cash back guy and I will get a lot of cash back this year (which I keep in my investment accounts). My business credit cards give me all the advantages. I get points, miles, discounted VIP event tickets and I don’t have to pay exchange fees when I travel the world.

I get travel insurance, rental car insurance that saves me $$$ on rental cars, and so much more. Plus, all of this is free when you pay off your balance. When you use your credit cards correctly, you can collect the benefits

4.5 To start your business

I advise you not to use your credit cards to start your business. Especially if you are a newbie with no experience in the field you are about to enter. The risk is too great. Now I used my credit cards to invest in my business. That was around $ 20k. That was a great gamble. But I had 4 years of experience when I launched.

I also kept my day job to help make the monthly payments. Created multiple streams of income to pay off balances faster. Those balances are at $ 0 now, but I had to get up, grind, and shine. It took me some time, but my business is successful. If your business fails, you will still have to pay off those credit cards.

Bottom line

Most people should steer clear of credit cards because they cannot control their cash and credit cards will make it worse. Use it only if you can pay the balance every month. Remember that paying interest and fees is stupid. Do not be stupid. It’s a great accounting tool, and the benefits are worth the discipline and responsibility.