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Cash or charge? Advisers warn against credit cards when special offers come your way

By Laura Chapman, The Southern

Sunday, July 6, 2008 8:52 AM CDT

As gas prices and grocery bills increase, the temptation to charge daily expenses to a credit card can be hard for some people to fight.

The desire to charge it can be even greater when credit card companies offer special deals or incentives.

But financial advisers caution people to be careful when their credit is at stake.

Michael Tison, an adviser with Raymond James Financial Services in Harrisburg, said people should view special offers from credit card companies with watchful eyes.

"I've always believed that if it's too good to be true, it probably is."

Although credit cards can be convenient and helpful to have, Tison said, it's important that people only charge what they can afford to pay when bills are due.

The reasons for caution - credit cards are the most expensive kind of debt, according to CreditInfo Center.com. When consumers carry their credit card balances from one bill to the next, companies typically charge 19 percent or more on the balance.

To best handle the rising costs, Tison said, people should make a budget and live by it. For people who are tempted to spend more than what they have, he said, using cash might be a better option than credit cards.

April Barker of Carbondale said she keeps a monthly budget to battle the increasing gas and grocery prices.

"I try to go where I know the prices are more affordable," she said.

J.C. Watts of Herrin said he, too, has made some changes in his daily life. For example, if he is going somewhere in Herrin, Watts said, he tries to walk instead of drive.

"If I don't need it, I don't buy it," he said.

Using a credit card is OK, Tison said, but it should not be used as a solution to cope with unmanageable expenses. To be financially secure, people should also try to save 10 percent of their income, he said.

"Especially in economic times like now, families and individuals need to be very careful with the amount of debt they're getting."

laura.chapman@thesouthern.com / 351-5816