Don't Abuse Your Credit to Get "Free Money"

An interesting article on ArtWoo where the author makes some valid arguments that credit cards should be used only in times of emergency and living within our means is the prudent thing to do:

Credit cards make sense to use if you know and understand how to use them correctly. Americans abuse credit cards, mistaking them for "free money" and opening many different cards at the same time to satisfy their thirst for expensive things and, ironically, things they can't afford.

If you use your credit wisely, you can actually save money by purchasing on credit. This requires paying off your credit every month to avoid interest and fees. In this sense, the 30 day loan is "free money" since your money is increasing with interest while sitting in your savings account.

Also, if the credit card that you use is a "cash back" card, you're also discounting the purchase price from 1 to 5%.

Saving money to get "free money" is ultimately the plan you need to work at:

1. Pay everything in cash for two months.
2. Keep track of everything you purchase.
3. Use Quicken or MS Money to help you track and budget your expenses.
4. Accumulate enough savings for your monthly budget then start rotating monthly expenses on your card to get the cash back and interest free loans.

Remember the important thing is to save and budget. Use your credit cards wisely by paying off the balance each month.