Warning: Irons are hot, so are credit cards

Are you thinking about getting a credit card? Credit cards are a great financial tool, but make sure you know how to use the tool correctly. Think about how horribly wrong things could go if you used a household tool or appliance inappropriately. I mean, you wouldn’t iron your clothing while you were wearing it! I would hope that a basic understanding of how to use an iron – and perhaps reading the warning labels – would let you know that ironing clothing on an ironing board will drastically lower your chance of getting burned.

Same thing applies to credit cards. In order not to burn yourself financially, use some of these basic rules for credit cards.

1. Pay the balance in full every month. Rule of thumb is, if you can’t make the full monthly payment, you shouldn’t have a credit card.

2. Only purchase budgeted things on credit. This will help you from overspending and track where the money has gone. If you don’t have a budget, designate your card for a specific purpose, like gas for your car or for emergencies.

3. If you can’t follow rules one or two, consider using a debit card.

Just like an iron, credit cards can be a helpful tool or they could create a painful situation. If you have a credit card, what rules have you set for yourself that might benefit others as they enter into the credit card world?