Credit Card Usage is Up. Here’s What to Do As a Consumer.

A recent Federal Reserve report states that Americans have increased their credit card usage, in fact the category that includes credit card debt has hit its highest point since the fall of 2010.

The average American carries at least $10,000 in credit card debt. At the height of the recession, credit card use had slowed down greatly as we all tightened our belts, but as unemployment continues to remain a problem, I fear that people may turn to credit cards again as a means of paying everyday expenses.

Here is the smart way to make credit cards a part of your financial picture:

1.) If you are going to use a credit card, get the lowest interest rate possible. Think about getting a credit card through your credit union (look into joining a credit union if you are not already a member) and avoid store credit cards at all costs, the interest rate on store credit cards are always in the double digits and can go as high as 26%!

2.) Try to use only for emergencies. Your car is in the shop, the washer has flooded the basement, a parent is ailing and you have to fly home suddenly. That is the purpose of a credit card, not for fancy dinners or buying a new wardrobe. Yes, there are those that charge a great deal to get points or travel rewards, but you must think about whether you can afford that.

Which leads me to my next point:

3.) Can you afford the monthly payment? The bill will be due in 30 days with interest. Was it worth it, can you afford it? You must now budget for this bill every month which is why I have always stated that credit cards should be kept for emergency use as much as possible.

4.) Do you have an emergency fund? A credit card is not your emergency fund. You should have at least eight months of expenses saved in a separate account. If you find yourself using a credit card to pay the electric bill, you have a larger problem here.

Black Enterprise Columnist Jennifer Streaks is a Financial Expert, Author & Pundit. Continue the conversation by following her on twitter @JStreaks or going to her website