This is the eighth post in a multi-part series on how to manage your finances so you can build up your savings, have a safety net, and still live comfortably today without having to live paycheck to paycheck. Click here for part 7, which discusses your insurance needs.

Credit cards are a double edged sword for our generation.  They let us buy what we need (and oftentimes what we want), offer us convenience, and help build our credit.  Of course, they can also dump us into a huge hole of debt that can take a long time to climb out of.  Obviously, you need to watch out for this.

It’s no surprise that the majority of people our age have credit card debt.  In fact, I recently read a report that stated the average credit card debt carried by a new college grad is $4,100.  That’s a lot of money that we don’t have.  That kind of debt can take years to pay off, and can severely affect your credit score.  It goes without saying that you should try to avoid credit card debt – especially with the ridiculously high interest fees that card issuers are charging these days.

So why do I use my credit card for as many of my purchases as I can?

1. I take advantage of the convenience but make sure to avoid credit card debt
   
   I pay off my balance in full every month.  Most of the time, I don’t even have to do anything – I’ve instructed my bank to withdraw all necessary funds from my checking account and use them to pay off my credit card every month.  By doing this, I avoid all of the issues (high fees, bad credit score, overbearing debt) that other people fall victim to.  As long as I can manage that, the convenience that my card offers is a great thing to rely on.
2. I build my credit
   
   For me, my credit score is a sense of pride.  Having a high score is something that I always aspire to, and by keeping and using my credit card, I make sure that I build my credit history, and thus, my credit score.
3. I get points and cash back
   
   This is obviously the biggest benefit of using a credit card.  The more I use it (for purchases that I really need to make), the more money I can earn back.  By using a credit card for all of my payments, I can actually save money in the long run.
4. I’m protected against identity theft
   
   When I use my credit card, I have the power of my bank behind me.  I can contest transactions that I deem unfulfilled (for example, if you pay a merchant and never get your products).  I am not responsible for any charges made without my authorization (this happens when your card number is stolen).  I have a bunch of really powerful computer systems analyzing the transactions on my card to make sure nothing’s out of the ordinary.  Basically, having a credit card provides you, as the consumer, a tremendous amount of protection.

There you have it.  As long as you can think of your credit card as cash straight out of your pocket as opposed to free money or an infinite loan from your bank, you can actually use your credit card to your benefit.  In the next and final part of this series, I’ll tie everything together, provide you a financial plan that you can execute over the coming year, and tell you about a great resource you can use to supplement all of the information I’ve provided in this series of articles.  Read on.