Credit Consumer

Being a credit consumer is not necessarily a bad thing as long as the person utilizing credit does it in a responsible way.

Credit Consumers in the Past

Credit usage is not a relatively new idea, nor is it something that has only occurred with consumers for the past few decades. Although credit usage is quickly becoming a preferred method for financial transactions as technology progresses, credit has been utilized for many years. Even though patrons of old western saloons were not issued credit cards for their drink tabs, they were credit consumers nonetheless. A credit consumer is someone who is given a product or service before paying in full, based on the promise of eventual payment under predetermined terms.

Credit Items

Credit consumers utilize credit for any number of items or services:

• The purchase of a home with the use of a mortgage
• The purchase of a car with the use of a car loan
• The purchase of items from a store using a credit card
• The covering of a checking account deficit using an overdraft credit account
• The financing of a vacation using a personal loan

In some instances, other types of accounts can be considered credit accounts even though there is no credit card issued. Some utilities, such as phone bills and electric bills can be considered a type of credit account because the services are supplied without immediate payment demanded after each usage. In terms of actual credit which is reported to the credit bureaus, however, utilities and other similar accounts do not generally make it on to a consumer's credit report unless the account goes into collections.

Responsible Credit Usage

Many credit consumers use credit on a regular basis and never have trouble with making timely payments or using the credit responsibly. Problems arise when the credit is used in an irresponsible manner and the payments are not made as previously agreed. When credit consumers get into trouble with credit, one of several scenarios occurs:

• The consumer realizes the problem and takes the steps to correct it
• The consumer declares bankruptcy
• The consumer enrolls in a consumer credit counseling service
• The consumer does nothing to fix the credit problem and continually deals with late fees, high interest rates, and living paycheck to paycheck.

Realizing the problem and taking the steps to improve your credit report is the preferable method to shake a credit problem. Credit consumers who are responsible with their credit usage have the advantage of not needing to deal with collectors, extra fees, and the other undesirable aspects that come with using credit frivolously. Obviously, responsible consumers are better able to enjoy the benefits of credit more so than irresponsible consumers.

Benefits of Credit

One of the biggest advantages of credit usage is the ability to make large purchases without having to immediately pay in full. Buying a home, a car, or other large ticket items might be otherwise unattainable to most consumers if credit is not available.

Many credit consumers enjoy the benefits of reward credit cards. These accounts grant the user rewards for purchases, and the rewards vary according to the terms of the accounts. Various rewards that are available include, but are not limited to:

• Travel Rewards: - With each purchase, the consumer earns points, which can be applies towards the cost of travel expenses such as airline tickets, rental cars, and cruises.
• Cash-Back Rewards: - The consumer receives a portion of their purchases back in the form of a cash reward.
• Merchandise Points: - Many retailers offer accumulation programs with their credit cards, which allow consumers to build up toward substantial discounts.

Many credit consumers claim that reward programs are a way to make their money work even harder. When rewards are accumulated in conjunction with the credit being used responsibly, this can indeed be a way to get a little more out of purchases. Credit cards should not be used excessively in an attempt to earn points however, because this can surely lead to financial problems. Being a responsible credit consumer involves using credit in a logical fashion and not getting carried away.

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