Credit cards can be useful if you use them the right way. Unfortunately, most people with the help of a credit card, keep buying things they don’t need, with the money they don’t have, yet. These people end up paying the previous month’s bills, every month.

The above scenario is no way ideal.

If you are thinking about having a credit card, only because you think that having a credit card will increase your ‘monthly spending limit’, then as a financial advisor, I’m obligated to tell you, “DON’T DO IT”.

Borrowing money, is never good in most cases. Not via friends, not via credit cards, not via loans. Simply because, interest is high.

Credit cards help you in buying things you can’t afford, just yet.

So now that we’ve understood “don’t have credit cards because you’ll end up spending more money than you have and pay high interests”, there’s another argument that people who have credit cards support, “credit cards gives you so many offers like free movie tickets, reward points, access to airport lounges, etc.. So, it’s good to have credit cards”. Let me tell you a secret, debit cards gives you offers like these too.

So if you’re thinking of having a credit card because you want to avail offers, I would advise you to look at other options, too.

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But like everything else in this world, credit cards too can be useful, if you use them the right way.

First use: Paying Bills.

With our 9-5s, or 10-7s, we’re already very busy. Paying off many monthly bills can be a hazard in some cases, and credit card helps you with just that.

Credit card can make paying bills easier in 2 steps:

1. You put your credit card on file: Once your credit card is on file, the payments are done automatically.
2. You pay the credit card bill only: Instead of paying a gazillion bills, you only pay the credit card bill.

Second use: Making Money.

You can use the credit cards to pay for your monthly expenditures (but don’t overspend, ever), and put the cash-in-hand to better use. For example, you can invest the money for 20-30 days, rather than paying bills, and later on, you can pay the credit card bill using that invested money, which would have grown slightly.

Third use: Emergency.

I always say this, you can never know what may happen next or when you might require money. You know that a car won’t hit you, but it’s better to walk on the safer side, right?

There could be any kind of emergency expenses (and I’m not talking just about hospital bills) and a credit card can be useful, during emergencies.

Conclusion: Credit card can be the right tool for you, is you use it the right way.