Credit cards can be your best friend or your worst enemy. Used properly, they’re a great way to build your credit and reap the many benefits that cards offer: free flights or hotel stays, discounted car rentals, or cash back bonuses. Used improperly, they can trap people in high interest debt. If you find yourself reaching for your credit card a tad more often than you’d like, use these tips below to curb that spending.
Credit card debt is the worst kind of debt to have: low monthly minimum payments keep you shackled to high interest debt. That means the credit card companies make money and you lose it. If you’re in that situation, it’s important to stop your credit spending as much as possible, as soon as possible. In general, whether you are in credit card debt or not, it’s good to ask yourself why you have a credit card and if you really need it.
Why Do You Have a Credit Card?
If you’re using your line of credit to inflate your lifestyle beyond what you can actually afford, it’s time to make a serious change. Take that bad boy out of your wallet and put it someplace hard to access while you reassess your spending habits and maybe get yourself out of debt. We recommend freezing it in a block of ice like they do in the movies.
If you don’t carry any debt, again ask yourself why you have a credit card. Are you in it to build your credit history or beef up a credit score? In that case, use your card to pay for one monthly charge you absolutely need. Health care is a good one. Put that on your credit card each month to establish a good history of payments. Choosing something mandatory to your life helps ensure that you’ll have the cash each month to pay off the bill (skipping out on the interest!) and it will also help your long-term credit goals.
Do You Love the Rewards?
If you’re using your card simply to reap the rewards, you have some more flexibility in how you spend. First, check out what exactly your card offers in the way of rewards. Some cards offer 2x the points on gas and only 1 point on groceries. If that’s the case for you, start using your card for gas ONLY. You’ll rack up double points and lower your overall credit dependence. If you get 1 point per 1 dollar spent no matter the category, pick one thing at random. Whether it’s groceries, gas, or travel; it doesn’t really matter. Just pick ONE to use your credit card on and put the rest on your debit account. I personally love using my credit card to rack up airline miles. Then, I book through Wherewithal and get up to 6% cash back from Expedia.
Another way to try to reduce credit card spending is through positive reinforcement. Positive re-enforcement can works wonders! Treat yourself in some small (preferably free!) way for each day you don’t use your credit card. Let yourself sleep in next Saturday if you go a week without using it or promise yourself a weekend away if you can go six months without a charge. Reward yourself for changing your habits, and you’ll find it gets easier to curb unnecessary spending.
Ultimately, responsible use of credit cards really comes down to being honest with yourself. I had a credit card that I used throughout college for bar tabs, travel and food. I noticed though, that I was prone to overspending or adding unnecessary items at the last minute to order when I used my credit card as opposed to my debit card. When I used a credit card, my spending went up. For me, losing that money and carrying debt over each month became more of a problem than giving up the extras I was buying myself. I canceled my credit card completely for a year and a half. It was a great chance to reassess how I think of money and my relationship to credit cards. Have that heart to heart with yourself about your credit situation, and you’ll notice a big change!
Have you had to curb your credit card spending before? How did you do it?