Managing family credit whatever your reasons, using credit in itself isn’t necessarily good or bad. It’s the way you use it that creates either benefits or problems for you and your family.

You have to manage credit. If you don’t, your debts will manage you and keep you from doing and having many things you really want.

You may not have thought of it in this way, but actually your credit, that is the confidence others have in you which makes it possible for you to borrow money or to buy on time, is indeed a valuable personal asset.

The purpose of the next few articles is to bring together some ideas which may help you use credit to your advantage.

We’re Talking About “Consumer” Credit

We are not talking about the mortgage on your home.

Our concern is only with consumer credit. By this, we mean the kind of credit families use to buy consumer goods and services – cars, flat screen LCD televisions, washing machines, computers, vacations, clothes, college expenses, in general things that are “consumed” (used to provide the kind of living a family wants). Consumer credit is short-term credit – usually within the range of 1 to 36 months.

Its use has exploded over the past 20 years, and buying on credit (using the ease of a credit card) rather than paying cash now seems to be the usual pattern of family money (credit) management Moreover, retail dealers and lending agencies all compete with each other to get more and more of us “on the cuff.”

It’s Your Money

In general, extending credit widely has provided a useful service for families, but it is not a free service. It costs money to buy “on time” or get “instant cash” from a lender. So it is worth your time to compare costs of credit from different sources – just as you compare costs of furniture or automobiles.

There’s another hazard. Credit purchases often are promoted in such a fashion that people may be tempted to buy more than they can afford. One more “small monthly payment” may seem hardly worth thinking about but when all the payments are put together they can add up to trouble. The very characteristic that makes installment credit a convenient means to provide a better living can result in a burden of debt that takes half a man’s pay check or more.

So it pays to ask a few questions before you sign the contract.