Credit cards are so common these days that we take them for granted. We use them to charge purchases, from groceries to shoes to restaurant dinners. They are so easy to use since swiping it is all that’s needed. People also prefer to bring cards instead of cash because they come with a lot of protections especially when it gets lost or stolen. For as long as you report it early, you won’t suffer a significant loss. This is unlike what happens when your bag that is full of cash gets stolen. Most of the time, you can’t expect your money to be given back to you.
However, it’s the ease with which credit cards are used that also makes them prone to abuse. Someone who gets carried away with plastic may go on a shopping spree, treating their credit card as if it was cash. Nothing could be further from the truth. Just because a credit card works doesn’t mean that it’s the end after you have already charged something to it. You’ll have to pay all these purchases you have made when the bill comes. If you can’t or can only make the minimum payments, you’ll be subjected to penalties and interest charges, increasing the cost of the items you had originally charged to the credit card.
Despite the obvious disadvantages of credit cards, you have to admit that they are very useful tools to have. Not only are they safer to use, they are also convenient. For as long as you have the money to pay the charges you have made completely when the bill comes, you can enjoy the benefits of a credit card.
If you want to enjoy the convenience of a credit card and not go into debt, you should learn how to manage your spending. The following section will give you tips on how you can manage your credit card spending.
It cannot be denied that credit cards are very powerful tools. You can harness that power to your advantage but in order for you to do so, you need to control your spending and not let it control you. Here are the strategies to help you use your credit card wisely:
1. Don’t charge anything that you can’t pay off by the end of the month.
Because it’s so easy to swipe plastic, you have to make it a point not to use it when you know that you can’t afford to pay for the purchase when the bill comes. Got attracted to a designer bag that costs way more than your one-month pay? Then you can’t afford that bag. Set aside some money for that purpose first.
The most prudent credit card users don’t make any large charges to plastic. What they do is charge only the small purchases—those things that they can pay off by the end of the month—and save for very large purchases so they can buy them with cash.
2. Keep track of your spending and the balance in your checking account.
In order for you to know how much you should charge to your credit card, you should know how much balance you have in your checking account. You should only strive to limit your spending to the money you have in your checking account. Once the money in your checking account gets depleted, you should stop swiping your credit card. You can do this manually or you can use online websites or software programs to help make the computations and monitoring easier.
3. If you have balances in your other cards, pay them down first. Avoid swiping until you have already kept your balances until control.
If you have existing balances in your other credit cards, pay them down first before you start using your credit cards. Leave your plastic at home whenever you would go to the store and confine yourself to cash purchases for the meantime. You should only start swiping again when your balances are already under control.
4. Put limits on your monthly spending.
You need to set a limit on how much you want to charge to your credit card each month. If you are already married or living with your partner, you should agree on how much you can charge to plastic based on your budget. Both of you should never go beyond the set limit. If you need to charge something once you have already gone beyond the set limit, you should inform your spouse. Honesty is key here.
5. If you can’t control your credit card spending, be creative with the methods you employ in order discipline yourself when it comes to wise use of your credit card.
If you really find it difficult to control your spending, you should be creative when it comes to disciplining your use of plastic. For example, you can leave it in a safe place at home if you want to go shopping. This way, if you find something you like but don’t have money for, you won’t be able to charge it. Some put their credit cards in the freezer while others hide it in the deepest recesses of their closet. Choose the method that works for you.
6. Before making a purchase, ask yourself: Do I really need this?
In order to prevent yourself from impulse buying, ask yourself if you really need an item you have picked up from the shelves. Don’t just put anything on your cart that you don’t truly need. By constantly asking yourself if anything you like is necessary, you don’t buy things on impulse.
7. List down your grocery list and stick to it.
Before you go grocery shopping, take the time to list down the things you are going to buy. Stay true to your list. If you see yourself picking up things that are not on your list because they were given at 50 percent off or were part of a special deal, ask yourself if it’s really something you need or use on a regular basis. If it’s not, put it down. As much as possible, pay for your food and groceries in cash or if you must charge them, be sure to pay it all off when the bill comes.
8. Never treat your credit card as an emergency savings tool.
A lot of people seem to harbor the idea that your credit card is an emergency savings tool. That is, they don’t put together a rainy day fund because they have their credit cards anyway. This is a wrong way of treating plastic. You should set aside money towards your savings account each month so you can deal with minor or major emergencies should they come knocking to your door.
While a credit card can really help you out when you are in a pinch, such as when you have already maxed out your insurance coverage, the banks are not open and an emergency surgical procedure is necessary, you should always look at anything you charge to it as payable immediately. If your credit card saved you once, let that be sufficient. Don’t make a habit of relying on plastic for those difficult times.
Credit cards have their uses. While those who insist that they are the bane of our existence condemn them, they are actually quite valuable when used correctly. The onus, however, is on you to control how to use your credit card. With the tips given above, you should be able to manage your spending, have your credit card when you need it and not get into debt.
Limit yourself to owning two credit cards at the most. If you get more credit card offers in the mail, ignore them. You could do with even just one card because this is something that you don’t rely on for your spending. What you should be mindful about is the amount of money you have in your checking account and in your wallet. That is all you should permit yourself to charge to plastic. Once the funds are gone, you shouldn’t use your credit card anymore. It only means that you won’t be able to pay off your purchases when the bill comes.
Have a budget. This is a very important component in disciplining yourself with credit card use. When you craft the allocations for each spending category, you know how much you should charge for food, utilities and other expenses. If your budget allows, you can give yourself some leeway as far as your discretionary or leisure expenses are concerned.
Be sure to pay your credit card statements as soon as they arrive. Delaying payments would only result to penalties and interest. A lot of people make a habit of paying only the minimums on their credit card balances. Avoid the temptation to do so. This will only increase your overall payments as more interest would be added to the principal. It will also take you years to pay. This is why you only charge the things that you can afford to pay when the bill comes.
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