Do you use your credit card responsibly?

Depending on which financial guru you ask, credit cards are either a useful tool of responsible money management or something you should never think of owning and avoid like the plague.

Dave Ramsey, for example, falls squarely in the "never, ever" camp, writing in "The truth about credit card debt," "Responsible use of a credit card does not exist....There is no positive side to credit card use."

But what about rewards, you ask? Ramsey says, "If you were using a credit card at 5 percent, you would have had to have spent $80,000 to get $4,000 rebates on new cars that lost $6,000 of value when you drove them off the lot."

Reality check

Not many of us are spending $80,000 on new cars these days. (And what average American has an $80,000 credit line on their card?!) Spending $8,000 a year on groceries is more like it...and that 5 percent rebate could mean another $400 a year in your pocket if you live within your means and pay your balance each month.

If you are disciplined enough to use a credit card responsibly, you can use the card to pay for groceries, utility bills and other day-to-day expenses, and bank your cash rebates in a savings account. In "A new credit card with sweet rewards," personal finance blogger Frugal Babe describes a card that rewards her with more than $600 a year based on their average card use.

Of course, if you've had problems with credit card debt in the past, a credit card is not a good idea. Just one missed payment or one huge impulse buy will negate any benefits from rewards. Plus, scary credit card tales aren't just made up for entertainment's sake. But if you use your card responsibly, it does have positive sides. You can take advantage of mileage and cash-back awards, more protection from ID theft than with debit cards, and the fact that it builds your credit history, which can secure you better loan rates.

3 rules of responsible credit card use

Using a credit card responsibly means obeying the following rules every single month:

1. Pay your balance in full each month. Even better, pay off a purchase as soon as you get home. Want an extra safety net? Set an automatic payment each month so you're sure to pay on time.
2. Exercise self-control. Acknowledge that using a credit card makes it tempting to spend more money, and find ways to counteract the ease of paying with plastic. Ideas include checking your budget each day, reducing the number of cards you use, imposing a mandatory waiting period before purchasing an item, and using visual reminders of your financial goals.
3. Check your statement carefully. Sometimes fraudulent charges are as small as a few dollars, making them easy to miss. Take advantage of the extra protection against fraud and report false charges.

Ultimately, no one forces you to sign up for a credit card. If you choose to do so, the responsibility lies with with you, the credit card user. Be honest with yourself about your financial habits and use whatever methods of payment are best for you.

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