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Osakis Voices: Credit cards have benefits, dangers

There are several topics, or items, that can get a bad rap in our everyday lives, but also have an upside, if managed properly. The first few topics that come to mind are cell phones, credit cards and with social media. Now, I'm far from being well versed in media, and although I have a cell phone, it's not something that I wanted to write about today. That leaves credit cards, and that is something that I do enjoy the benefits of, and would like to share with you a bit more information on proper use of a credit card.

Now, I know that there are people reading this that are well aware of how to properly manage a credit card, but I'd like to focus on those that are about to open a credit card account (my mind immediately goes to myself turning 18, and I felt like I would get credit card offers in the mail daily). It's people who are about to start their journey of building credit that I think will get the most out of my article.

So, let's start out with what a credit card is. A credit card is an unsecured line of credit that you can use to buy everyday things. The limit on that line of credit is calculated on a number of factors, including credit history and monthly income.

Many credit cards now offer incentives to have you use their card primarily. These incentives include a sign-up bonus, extra points for every dollar spent on the credit card at certain places or additional cash back. These incentives typically carry on with regular use, but it's important to know that chasing promotions on additional cards can not only be difficult to manage, it can negatively affect your credit scores.

It's because of these promotions that make using a credit card for everyday purchases very beneficial to you. I've use points for free flights, hotel stays and even speakers for the living room! All of which were for no other reason than using the credit card for the purchase.

On top of the perks that a credit card can offer, you'll also see benefits to the credit report as well. Using 30 percent or less of your credit line keeps your debt utilization ratio in check, and paying on time will help boost your credit score.

Now, that goes to show some of the benefits of using a credit card for your typical purchases, but there are certainly reasons out there why credit cards can bring to mind a negative thought for some people. It is NOT free money. If the credit card balance is not managed properly (i.e. paid off every month), the balance can get out of hand, and the interest will make you feel like you have a big, dark cloud over your head. This is why it is very important to only use the credit card for purchases you would have already made (gas, food, utilities, etc.). Buying frivolous items is where that "trap" can set, and make you feel overwhelmed.

Self-control if your best friend with credit cards, but if you manage it properly, reaping the benefits of a credit card can add a nice perk to your financial wellbeing.

Osakis Voices is a rotating column written by community leaders who share their thoughts in their field of expertise.

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