9 tips to curb you credit card spending
Have plastic - will shop! Tired of seeing those credit card statements roll in each month and find that you're kicking yourself for some of the purchases you made on that list. Then there's the usual discussion with your spouse concerning the relevance of such transactions like "I don't remember ordering anything from Danoz this month?", "A Mars bar, you put a Mars bar on the card?"
They say hindsight is the greatest teacher you just don't want to have to use it at the end of every month. So, rub some ointment into those bruises, lift your head up from the ground and let's apply some strategy to next month's purchases.
- Stop and think. Unless you pay your bill in full each month, never use a credit card to pay for anything you can eat or wear.
- Avoid using credit cards to buy nonessentials, like an iPod or a TV set. If that's what you really want, show some personal discipline and restraint. Save the money to buy it.
- Get rid of all your cards but one. Hopefully, that will be the one you've had the longest, as history plays an important factor in the credit-scoring process. Now make it hard to use. Remove it from your wallet and keep it in an inconvenient but safe place.
- Don't take cash from your credit-card account. The interest rate for cash advances is much higher than for purchases, the cash-advance fee is ridiculous and there is no grace period on cash advances. You start paying interest right away. Worse, you cannot begin to repay the cash advance until all of the lower-interest purchases are paid. If you carry a balance, that could take many years.
- Do you really think credit-card companies are interested in giving you something for nothing? No way. Throw away all offers that come in your billing statement. Don't even read them, and you'll avoid temptation.
- Read your monthly statements carefully. Look for hidden charges, such as credit insurance, administrative costs and mysterious fees. Question everything and ask that these weird obligations be reversed.
- Don't pay for theft insurance on your credit card. You don't need it. If your card is stolen, you're liable for only $50 at most, anyway. And forget disability insurance. It will make your debt worse if it ever kicks in. Sure, you won't have to make payments for a season, but the interest continues to accrue, so the debt will just pile on.
- Always use the envelope provided in your statement when mailing your payment. It contains the most current mailing address, and it has bar-coded information that will speed it through the processing system.
- Last (and possibly most important), pay off your credit-card balance each month. You'll avoid frittering away thousands of dollars in interest and fees every year.
The source for these tips is Mary Hunt, Everyday Cheapskate.
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