Good Times To Carry A Credit Card Balance
We’ve talked a lot about the advantages of cleaning out your balance monthly as opposed to keeping a balance on your credit card. While generally a good rule to follow, not all situations will warrant the same solution. In fact, there are some times when keeping a balance makes more sense than being debt-free month-to-month.
1. If you have a financial plan and the balance is a necessary part of it
If you have a current financial plan which can make better use of your cash than putting it into paying off debt, then do it. Using the flexibility of a credit card to let you float money while you look towards the future is not only viable, it’s smart. Of course, the plan has to be sensible in order for this setup to hold any water.
2. Your business needs it to survive
Bank loans and small business financing is getting harder to procure nowadays. Should your business be a profitable source of income, using your credit card balance to fund operations may be acceptable. So long as you can still profit in spite of the interest then credit card use should be to your advantage.
3. You’re short on cash but expect money in the future
During times you’re in between jobs, for instance, using your credit card instead of dipping into your cash savings can prove a better insulation to potential financial exigencies. Conserving cash is preferable to cleaning out your balance when the choice comes down to those two, especially during trying financial times. Here’s the deal, though: you must absolutely do this only when you’re certain you can cover any debt you run within the short term (three months or less). Any more than that and you’ll be putting your financial well-being at serious risk.
4. Real emergencies occur
If you find yourself in a real emergency, such as when a tornado blows the roof off your house or your son ends up in a hospital, carrying a balance is undoubtedly preferable to having to suffer through the situation. Needless to say, this rule is strictly for actual emergencies, not frivolous ones such as not having a new dress for a party.
