Spend Wisely With A Credit Card

You are shopping with a friend. You see a GREAT deal, but know that you don’t really need it. You think “eh, I’ll just pay for it later.” Cha-ching. You pay with your credit card. You go to the next store or even shop a few days later and say the same thing. Then the credit card bill comes in the mail and you wonder “where did all of our money GO?”

And the cycle continues.

Credit cards are wonderful. Really, they are. IF you use them in the right manner. How many people do you know who are credit card debt? Maybe some are a few thousand. Then maybe some 50,000. And maybe some are in such high credit card debt, that you wonder how they will ever get out of it. Maybe that person is you. Do not despair. It is NEVER too late to make a change. But how? Here are a few ideas that you can use to make subtle or maybe even drastic changes.

1. Know the responsibility of owning a credit card. Seems kind of elementary, doesn’t it? But really, it is so easy to lose track of WHY we have credit cards. Know what your interest rates are, if you do not pay it off monthly. Know what the annual fees are. Know what your boundaries are WITH that credit card – how much are you willing to spend? What is your credit limit?

2. Limit the number of credit cards you have. I know, this and that store will give you 20% off your purchase if you open up a credit card with them TODAY. Yes, it may save you a few bucks. But if you do not trust yourself with another card, do not sign up for it. If your wallet is starting to break at the seams, time to downsize. When I worked at a bookstore, customers would take out their PILE of cards and spend 20 seconds sifting through them all to find the right one. Is it worth it? Only you can answer that. Just remember, the more cards you have, the more you think your money is spread out, but in the end, it all comes out of one account – your bank account.

3. Make sure your credit limit is high enough. Sounds odd, doesn’t it? Doesn’t it sound like I am promoting crazy spending? I am not. But if you are going over your credit limit every time, credit companies see that. We will never spend what our credit limit is (at least I hope not!), but if something went really wrong in our life, we would be able to quickly put the emergency expense on the card, without having to break our credit limit and try to find the money elsewhere.

4. Good rule of thumb: Don’t spend more than what you can actually afford. I am sure you have heard that said before. Sounds simple right? Well, how come credit card companies are making a killing off of us – it’s because we spend more than we can afford. Those interests rates are so damaging. A shirt that once cost $30.00, now costs you 1/3 more because of interest rates. Anytime you do not pay your bill off, whatever was on that bill, has just cost you even MORE. I hope that item was worth it! (I know it sounds harsh, and I don’t mean to come across as rude, but we need to think about how much we are spending on the stuff we really can’t even afford in the first place).

5. Keep track of your spending by going online or use a register. Use the old-fashioned way or the new-fashioned way. Whatever it takes to assure that you KNOW what you are spending, do it! The last thing you want is to be surprised by the bill at the end of the month.

6. Ask yourself the difference between needs and wants. When you are ready to swipe that card for that item on the conveyor belt, ask “do I really need this? Is it worth it to pay for it later?” This is a question only you can answer for yourself. It will take a lot of self-control, but start to train your brain to know what you truly need and the wants that keep haunting you.

My husband will not carry a credit card. This is by his own choosing. He knows that if he does, he will just keep swiping and swiping that card. He knows his limits and he has set boundaries for himself. If he needs to order something online, he asks me for the card, then gives it back. I have to say I am proud of him. We use our credit card mainly for gas. I know you can get crazy reward points on a credit card, but for us, it’s not worth seeing the big bill at the end. It’s just what works for us. I am not saying that we are right or wrong. For everyone, this looks different. Big purchases (like a new refrigerator), we will put on a credit card, but for our weekly spending, we use a debit card.

How do you use a credit card? What limits have you set for yourself? Do you struggle with credit card debt? What are your thoughts?