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Using credit cards can be tricky and often gets people in a lot of trouble. Here are some helpful tips on using credit cards wisely. Follow these tips to stay organized and keep yourself out of credit card debt.
1) Have One Major Card
Multiple cards make it easier to overspend. How are you going to track spending across multiple cards? Just keep one card for the majority of your purchases. If you have to, have another one as a backup for emergencies.
Find the best one card for you here:
2) Pay Off Your Credit Card Balance Each Month
Paying off your balance each month is like getting an interest free loan for your money. You don’t pay interest and won’t accrue credit card debt. If there were only one tip for using credit cards wisely, this would be it.
3) Don’t Use Your Credit Card for Smaller Purchases
Lots of small purchases are difficult to keep track of and add up to larger balances. Spending $20 several times a day with a credit card is easy to do. Instead, use cash for purchases under $100. With cash, you can see the balance decrease, and it’s harder to overspend.
Large purchases are easier to keep track of mentally and to approximate your balance. Just don’t use a credit card for substantially large purchases, like cars. Remember the previous tip, pay off your balance each month.
4) Avoid Using Your Credit Card for Cash Advances
When you use your credit card for cash advances, the interest starts right away. You may also incur bank and ATM fees. The fees and interest can add up to a substantial cost for your cash advance. Use your bank account instead, and if you don’t have enough money, then you should think twice about making the purchase.
5) Pay Your Credit Card Bill Early
If your payment is late by even one day, you will be charged a late payment fee. These fees add up quickly. Get into the habit of paying your bill the day the statement arrives, or pay your bill online and save yourself the stamp.
6) Monitor Your Spending
What’s to prevent a restaurant employee from adding a 1 in front of your bill? Keep receipts and check the amounts against your statement. Turn on alerts with your credit card, or use Trim, to be notified of larger spending amounts.
7) Avoid Store Cards
Store cards lure you in with promises to save today. “Save 20% on your purchase today by signing up for an extremely high-interest rate credit card!” The ugly truth is that store cards charge the highest interest rates, and they more than make up for the discount through interest charges. Avoid this trap and store cards altogether. If you do get a store card, make sure to call and close the account after you pay the bill.
8) Stop Pre-Approved Credit Cards From Arriving
Getting pre-approved credit cards in the mail can be extremely tempting. Stop them from arriving in the mail by visiting www.optoutprescreen.com or by calling 1-888-5-OPTOUT (1-888-567-8688). You can opt-out for five years or even permanently.
9) Cancel Cards the Right Way
If you decide to get rid of a credit card, don’t just cut up the card. Make sure that you call the issuer to cancel your line of credit. You will most likely suffer through 30 minutes of elevator hold music and passionate representative pleas to get you to stay, but remain firm in your decision.
10) Confess, Apologize, and Ask a Favor
If you have a late payment, call the credit card company. Confess that you made a mistake, apologize for your mistake, and then ask them if they will remove the charge. You will be surprised at how often they agree to reduce your bill. I wish that I had used this strategy when I made money mistakes.