I like credit cards, but they are not for everyone, and people should be aware of the dangers of using them to avoid unnecessary hardship. I only recommend credit card use if you can follow these guidelines:

1. Avoid paying interest by ALWAYS paying the owed balance in full by the due date. Credit card interest rates are very high, usually over 20%, and you do not want to be paying that!
2. Understand the benefits included with your credit card, which may include insurance, purchase protection, fraud protection, etc., and use them!
3. Stick to a budget.
   • It is proven that credit cards can motivate spending and cause you to spend more than you would have otherwise spent (Prelec & Banker, 2021).
   • Don’t let credit card rewards justify additional spending.

If you stick to the above guidelines as I have, your credit card can offer many benefits. I have used my credit card’s trip cancellation insurance to cover the cost of needing to reschedule an international holiday due to illness. I have also used its mobile phone insurance to cover the cost of a screen replacement on my mobile phone. Several times over the years, my credit card was compromised, and fraudulent transactions were made. Each time, the credit card company voided the charges and issued me a new card without any problems. Although I am not getting rich off them, I do collect airline points that we use to travel every few years when I have enough points accumulated. By making use of the benefits and not allowing myself to fall into the traps, I am confident that others like me can make credit cards work to their advantage.

References:

Prelec, D., & Banker, S. (2021, June 9). How credit cards activate the reward center of our brains and drive spending | MIT Sloan. https://mitsloan.mit.edu/experts/how-credit-cards-activate-reward-center-our-brains-and-drive-spending