Credit Cards

How to Stay Out of Debt (& Save Money) By Using a Credit Card

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Managing money is something that we all have to learn how to do in life, but that doesn’t mean it’s easy to figure out. Even experienced individuals and adults who have been financially independent for decades can struggle with the loopholes and confusion behind different methods of payment.

Credit cards are a great way to borrow money from your bank through a line of credit and pay it back later. Some may think that this piece of plastic is some sort of magical alternative to paying in cash, but there are huge ramifications to not educating yourself on the specifics of paying with credit cards. 

We’ll give a quick overview of the details behind lines of credit, how paying insurance with a credit card can be helpful, and how to save money by paying with credit cards instead of with cash or debit cards.

Why not just use cash?

Paying for everything in cash is not a viable option because it can be easily stolen from your wallet or purse. You simply carry too many pieces of paper currency when going out on the town. 

It also makes it nearly impossible ever to purchase a larger item or expense. You’re not going to buy a car for Christmas for your spouse with $25,000 in cash. You’ll drain your bank account and put yourself in a vulnerable situation.

Taking out a credit card establishes good credit with your bank. Credit allows you to become more financially flexible and buy things that would otherwise be out of your price range. But this is where things can get messy for overzealous credit card spenders. 

If you use more credit than you can pay back at the end of the statement period, your credit score will plummet, and you won’t be able to take out loans or credit cards in the future. 

Keeping good credit is mutually beneficial to you and your lender. This responsibility indicates that you are someone who will abide by an agreement and can always be trusted. People who never pay their credit card loans are more likely to be immature and not financially stable. They seem like they are trying to take something that they do not have in reserve. 

If you feel like you can make good decisions and you understand that you are spending someone else’s money when you make a credit card purchase, there are a lot of perks to using credit cards.

What are some of the benefits of using credit cards?

Credit cards are great for making automatic payments, especially on bills that recur monthly. Paying for your water, electricity, and auto insurance with a valid credit card that has been paid off and has credit to spare will save you time filling out bills and paperwork. The money will simply be taken off the card at the time of billing.

Nearly all auto insurance companies will accept credit cards, but you can also pay through a third party (think PayPal) or by debit card. The latter option takes money directly out of your checking account and is not a loan from the bank. This can get messy if you don’t understand the difference between debit and credit. 

All in all, there is a time to use all different types of payment options, but credit cards provide some cool conveniences that others don’t afford. Many credit cards even encourage spending by rewarding you with a cashback program. This gives you a certain percentage of your money back when you go to pay off your loan. 

Educate yourself on the details of credit cards that have been given. Talk to your bank about the different types of credit they provide, and you should be well on your way to a solid credit score.

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Shawn Laib writes and researches for the auto insurance comparison site, He wants to help people understand how different types of insurance will save them money when they least expect it to.

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