CPA Kenneth Hall discussed the pros and cons of using credit cards Monday on News 8 at Sunrise.

Many will use credit this time of year to supplement holiday purchases.  Hall started by addressing some of the dangers associated with credit card use.  “It’s important to know when you have a credit card, that it’s money that’s going to come out of your pocket later when the bill comes in the mail or email,” he said.  “Once you can install discipline in your spending it’s good to think about a credit card, but if you can’t control yourself, credit cards are a real bad thing.”

Interest rates are an important consideration when using a credit card.  “Often times your credit card will start out with an introductory rate, and then over time, several months, it will bump up,” Hall said.  “The other thing is cash advances, people say – hey this is cool I can go get money – but those carry typically a two or four percent fee right out the chute.”

There are advantages to using a credit card, some obvious and some not as evident.  “Convenience is the number one thing,” said Hall.  “When you have a credit card you don’t have to drive around looking for an ATM or pay ATM fees.”  It can be useful for emergency spending needs and keeping track of business expenses added Hall.

Credit cards also offer hidden advantages.  “One of the things that I find interesting are the points you get on airline miles,” Hall said.  “I carry an airline card, so when I travel on that airline my baggage is free, and if you’ve ever traveled that mounts up pretty fast.”

Purchase protection is another benefit.  “A lot of people don’t realize that when you’re using a credit card, your credit card company is with you, so if you have a question or want to challenge a purchase, you can challenge that using your purchase protection,” noted Hall.  “There’s also travel protection, so when you’re traveling with your family even, it’ll cover you for trip interruption and other things that can go wrong when you’re traveling.”

Hall added, “At year end your credit card company will send you a year end summary, which is a listing of all your spending for the year and when you’re preparing your tax records you can easily then spot your charitable contributions or business expenses.”  He also said for young adults a credit card can help establish good credit with lending agencies.  “Getting a credit card, carrying a balance, making regular payments are the steps you take when you’re starting out to establish that all important credit rating,” Hall said.  “A lot of our younger viewers want to one day buy a home and getting a good credit rating is a good way to prepare yourself for that big loan.”

For more information, visit the New York State Society of CPAs website, click here.