Credit cards are a great resource to have when you are faced with an emergency. We all have different ideas as to what constitutes an emergency, but it is important to carefully consider under which circumstances you should - or shouldn’t - use your credit card.

You may be tempted to make non-essential purchases, but remember that you will always have to pay your credit card off. Most of the time you will be charged interest on your credit card purchases.

Here are some helpful guidelines for using your credit card: if you can eat or drink it, you should not charge it to your credit card. If you are considering purchasing an item that you will still have next year, consider using your credit card - but be careful. If you need something that can’t be purchased without using your credit card, you probably should use it. Just make sure that it is something that you need, not just something that you desire in the short term.

Say, for example, that you are purchasing living room furniture but cannot afford to pay the whole purchase off immediately. The furniture warehouse offers financing, but the interest rate is 19%. If your credit card has only a 9% interest rate, it makes sense to use your credit card to purchase your furniture.

Remember to make your payments on time every month. Pay as much as you can, when you can. You don’t want those charges to stay on your credit card for very long. The longer the charges are on your card, the more you pay in interest. The more you pay in interest, the more expensive your new furniture becomes.

The purchase of large ticket items may not constitute an emergency, this is where budgeting helps. You can live without that new living room set. Try to keep the balance low on your credit card in case of a real emergency. You may lose your job, and will need to pay your bills with your credit card for the time that you are unemployed. You will pay more in the long run, but your credit card will help you through financial uncertainty.

Another emergency situation could arise if you have to leave town for a funeral. You can use your credit card for a motel room or other travel expenses. Again, you don’t want those charges on your credit card for long periods of time, but you can use the card to help you through this difficult situation.

Use your card wisely; make only essential purchases, pay your card off regularly, and keep your balance low. This will keep your rates low and help you build a good credit rating. Your card will be available to you in case of emergencies, and in the long run will help you gain financial stability.

This entry was posted on Tuesday, June 17th, 2008 at 1:54 am and is filed under Students and Credit. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.