I’m always reluctant to cover credit cards here at Get Rich Slowly. There are other sites that do it better. Besides, I’m still not wholly convinced they’re a good idea. Plus, my wife — who is always right — told me the other day, “I don’t like it when you write about credit cards. Credit cards are boring.”

Still, in today’s world, effective use of rewards credit card is an important part of personal finance. If you don’t use them correctly, you can end up deep in debt. (I’ve experienced this first-hand.) But if you do use them properly, they can actually help your financial situation. (Note: See How to Choose a Credit Card).

Joining the Dark Side
When I started Get Rich Slowly, I was staunch supporter of the anti-credit card camp. I’d been stupid with credit cards when I was younger, and they were a big reason I found myself with over $35,000 in consumer debt. I’d been burned, and like Dave Ramsey, I couldn’t see any benefit to using them.

As my financial habits improved, however, I came to understand that credit cards aren’t necessarily evil. My wife, for example, has had a credit card for as long as I’ve known her (over 20 years!), and has never carried a balance. She loves using her Discover card, which gives her up to 5% cash back. (“To be honest,” she told me tonight, “I only get about 40 cents per month from using the thing, which is about half a percent cash back.”)

Still, I was wary. But three years ago — as we were preparing to travel to England, Ireland, and New York — I decided to take a risk. Based on the urging of GRS readers, I signed up for a credit card. I chose the Capital One No-Hassle Cash Back card because it offered some perks for travelers, and because I liked the idea of getting a one percent cash discount on everything I buy with it.

Note: I mentioned this card obliquely in Sierra’s post about travel yesterday, which prompted Stephen to ask which card I use. Now you know. I’m not endorsing it — there may be better options — but it works for me.

When I signed up for a credit card, I made some rules for myself. I vowed to:

  • Pay off the entire balance every month.
  • Never buy anything on credit unless I already had the cash in the bank to pay the bill.
  • Make my decision about what to buy and then decide how to pay. (Instead of saying, “Oh, I have a credit card, so I can buy this.”
  • Never use my credit card for impulse purchases.

If I violated any of these rules ever, I promised myself I’d cut up the card. Three years later, I still have that credit card.

The Chainsaw of Personal Finance
While I’m not about to sing the praises of credit cards, I do think they’re a useful tool in the responsible person’s financial toolbox. To quote myself from Your Money: The Missing Manual:

Credit cards aren’t evil, but they can be dangerous. Just as you’d treat a chainsaw with respect, you need to be careful with credit to avoid hurting yourself. And if you use them wisely, credit cards can actually give you a financial edge.

I don’t write about credit cards very often at Get Rich Slowly. If there’s something that needs to be said about credit, I usually let a guest poster do that. (Get Rich Slowly has good relationships with both Index Credit Cards and Card Ratings, and fellow blogger Five Cent Nickel keeps an updated list of balance transfer credit cards; they all know a lot more about this stuff than I do.)

But I’ve been wondering lately just how GRS readers use credit cards. I suspect that many (most?) of you are like me: You use credit cards wisely, and they’re tools that helps you achieve your goals.

So, I have some questions today. As I mentioned, I’m using the Capital One No-Hassle Cash Back card (man, what a dumb name!). What about you? Which credit card(s) do you use? Why do you use it? How, when, and where do you use it? Do you have personal rules for credit card use? Have you ever been in credit card debt? How do you steer clear of that now? I plan to collect your answers for a future post, one that I hope will help others learn to use credit cards responsibly.

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