Credit Cards
Credit Cards can be our friends, or our enemys depending on how we use them. When a new credit card shows up in the mail, someone did not just "sent us $5,000", but rather a license to take $1,200 a year of our hard earned money if used incorrectly (ie. maxed out). 19% interest or thereabouts is stagecoach robbery at it's finest, especially with such lower rates. Oh the banks may say that because of higher default rates, they need to charge higher interest, but why should you pay to cover somebody else's default? That should be the banks problem when deciding how to present their offers and who to issue a card to in the first place.
Ways to use credit cards.
Sometimes we need a credit card, as in making reservations on the phone, checking into a hotel, conveniently buying something on the internet. It is what happens when the bill comes in that is important. If the monthly charges were manageable, they should be paid off in full when they come in.
Benefits then can include even shopping for groceries and business expenses by credit card that you then receive frequent flyer miles or points on. Using cards that allow you to link to a points program can get you quite nice prizes and even gift certificates and RESP savings grant money all by just buying the things you were going to buy anyway.
The downside to credit card use is paying the ridiculous interest rate. If you have to borrow money, do it on a line of credit with a lower interest rate if possible. Borrowing from friends is not a good idea because the ill will that a late or broken payment can cause can be life-lasting and not worth the relatively small amount of the loan. Unless you know for sure you can pay something like that back, don't do it.
If the situation is temporary, it is ok to borrow somewhat, but at the same time steps and action should be taken to increase income and the likelihood of repaying the debt as soon as possible. Rather than forgetting about it and paying the minimums, active progress should be made. Carrying a balance for the long term is sure to waste alot of money. Paying them off every month and enjoying the cardholder benefits including insurance, car rental secondary coverage, frequent flyer miles etc.. and the convenience of charging purchases is a great tool when used correctly and with the right perspective.
Pay your credit card bills and other bills on time using online banking instead of spending money on stamps. Keep extra money in high yield savings accounts instead of regular checking accounts.