OK This should now fit in with what you need. Many apologies for the confusion.
Even in these hard times it’s horribly easy to get credit. Horribly? Isn’t credit a good thing? Well yes, it can be a good servant, but it’s a very bad master. Credit cards and store cards in particular can tempt you to spend much more than you meant to. All those great offers, wonderful unmissable bargains, the total ease of shopping online, and tomorrow (when you have to face the bills) is another day.
So, how can you use your credit card wisely and as a budget planner? They are actually great as an aid to budget planning – if you don’t let them run away with you. First of all, only have one, or at most two, credit cards. Find one which has a good interest rate and which offers you the best shopping points, air miles, or whatever you like to collect, and use that for everything. The second way is back up for if you lose the first one, or if you are traveling – some credit cards work better than others overseas.
Never use your credit card for anything trivial, like food, coffee and a sandwich and the like, unless you are absolutely sure that you will be paying it off at the end of each month. Set yourself a monthly spending limit on your card, and monitor it through the month – so easy now everything is on line. When you hit your limit – stop!
Credit cards are a very expensive way to borrow money, so if you are thinking of making a larger purchase which really can’t be put off – for example, if your car breaks down and you need to buy a new one right away – then get a short term personal loan instead. The old fashioned idea of saving for things that you want, rather than things that you need, is a good one, and try to make saving a part of your financial management plan.
For buying on line, systems such as Paypal where you can build up a cash reserve, or where payment comes out of your bank account, are far preferable to using credit cards, and also has the benefit of extra security.
Remember, when it comes to budget planning, a credit card is a very good servant – and a very bad master! Just be sure not to overspend to minimize personal loan. But if you have unexpected bills, you can’t really avoid personal loans.