Credit cards are wonderful financial transaction tools. But many people think them as an additional income source that they can use to spend beyond their means. They eventually get into deep financial troubles or waste their money on excessive interest payments. If you know how to effectively use credit cards, you can save money and organize your finances easily by using your credit cards.

First, you must remember that if you are not able to pay your credit card charges 100% when it is due, you are simply wasting your money and moving towards financial ruins. So, every time you take that credit card to make a purchase, ask yourself this question, "Am I able to make the full payment when the bill arrives?" If your answer is a "no", don't make the purchase.

Are you using your credit cards to withdraw money from ATMs? If you are not able to see your financial doom, get ready for it because it is definitely coming. Banks issuing credit cards charge a steep 3% to 5% cash withdrawal fee and a 20% or more interest rates from the day you take cash out using your credit cards. You have to pay these charges even if you pay your balances in full when it is due.

Are you sharing your cards with your room mate or boy friend? Don't do it because you don't have any control over their spending. You are responsible for all the charges they make. Even if they promise to pay you back, there is no guarantee that they will or are able to do so.

If you are a responsible credit card user who pays all of the charges 100% when it is due, you can use credit cards for all your purchases. There are numerous benefits of using a credit card your purchases.

Some banks extend the product warranty when you buy the product using the bank issued credit card. You don't have to buy any additional warranty which manufacturers or retailers sell for a premium.

You may get extended life insurance coverage when you buy an airline ticket using your credit card. You may also get your expenses like hotel, clothes, toiletry, etc. reimbursed in case of lost luggage and flight delays

If you have a dispute with a merchant and are unable to resolve it to your satisfaction, you can call the credit card issuing bank help you resolve the problem. You can even dispute the charge if you believe that the merchant is a scammer.

Some credit cards will give you 2% to 5% cash back bonus on all your charges. If you are spending $2000 on groceries, utility bills, gas, etc, it can amount to $40 to $100 a month straight into your pocket without doing anything.

If you loose your wallet with cash in it, there is no way to recover your loss. If you lose your credit cards, you can call the issuing banks and get replacement cards without any financial risks.

If you have a few cards, you can use each one for a specific category of purchases. For example, you can use one card for all your grocery purchases, another card for your gas expenses, and yet another card for your lunch spending. At the end of the month, it will be easy for you to see how much you are spending on each category.

In case of emergency while away from your home town, credit cards provide indispensable and immediate help. You don't need to call your friends and family to wire you money you need to meet unexpected expenses like hospital bills, car breakdowns, etc.

If you are a responsible credit card user, there is nothing wrong using your credit cards for all your purchases. In fact, you will reap benefits by using credit cards for all your purchases.