I'm a fan of credit cards as a smart tool in your money management basket. However, I can say that because I pay off my balance each month. It goes without saying that if you can't pay off your balance each month, credit cards are an expensive way to manage your money and should be avoided.

Pros

No Need to Carry Large Amounts of Cash

With the cost close to $75 to fill a tank of gas and a simple trip to the grocery store over $50, carrying that much cash around leaves you vulnerable to theft or loss.

Using the Credit Card Companies' Money

Depending on how much you use the credit card, this can add up over time. We once paid for a portion of a used car using our credit card, but only because we were going to pay cash for the car anyway, and did so, but six weeks later (earning interest on that money in the meantime).

Rebates

We regularly earn several hundred dollars a year in rebates because we pay for almost everything with credit cards. However, this benefit is completely lost the first time you can't pay off that bill when it's due.

Tracking Your Spending

When I use cash, I quickly lose track of where I spend money. When paying with credit cards, I can easily analyze just how much, where and how often I've spent it. My credit card company allows me to download each transaction and I was once amazed just how much and how often we were eating out instead of at home. Using that information helped me to change some bad spending habits.

Online Shopping

With more and more of my shopping being done online, a credit card is a necessity. If I'm unsure of the legitimacy of the website, my credit card company offers the ability to get a temporary number to protect me from fraud.

For me, the Cons of a credit card come down to two things:

Overspending on Things You Don't Need

It's easy to overspend when you forget that what you buy with a credit card is real money and will need to be paid off.

An Extremely Expensive Way to Borrow Money

If you can't pay off the balance each month, the interest rates, penalties and other fees can really add up over time.

Credit cards are money management great tools, but only if you can pay off the balances each month. My recommendation is that that if you have any balance on any credit cards right now, put them in a drawer and pay cash for things until you can pay off the entire balance.