Credit cards are a great tool, especially in modern society. So much purchasing and selling is done on the internet. Even going to the supermarket can be made faster and easier with a credit card. Carrying one is also safer because you can cancel it if it is stolen, whereas stolen cash is just gone. However, there are a number of things that you need to keep in mind to save money and avoid debt. These are the main pitfalls that go along with credit cards.
Check Your Benefits and Rewards
Some cards give you cash back on purchases. Even if the rate is only one percent, you will save a dollar on every hundred dollars. That means that you can get a free hundred dollars every time you spend ten thousand. This might not seem like much, but it can add up over a year. If you get this, you may want to use your card for all of your little purchases to help the numbers all add up.
Keep Your Budget Anyway
Do not ignore your budget just because you are not writing checks. Get receipts for everything that you buy and keep track of it at home. This will make sure that you are not as prone to spending more than you have, or to spending money that was supposed to be kept as savings, just because the money does not physically run out as you spend it.
Do Not Spend More Than You Have
The interest on a credit card is often close to thirty percent. If you only spend as much as you can pay off, you will never see this. Spending more than you have can cause you to accumulate a lot of debt. For comparison, a typical mortgage runs at around five and a half percent in interest.
Do Not Take Your Card To The Bar
The bar is a good example, but you should really make sure not to take your card to places where you are prone to overspending. If you have twenty dollars left in your budget for entertainment and you take it to the bar in the form of a bill, you cannot spend any more. With a card it is easy to spend thirty dollars instead, or even more.
Other Places Not To Use Your Card
There are other places where you should not take your card if you are prone to over-spending. If you have self-control, you should be fine. Do not take your card to any of the following places if you are worried about your habits, however.
— A restaurant. You may buy the more expensive dish if you have the credit card.
— A ball game. You could be talked into a beer and three hot dogs if there is no limit to what you can spend.
— The supermarket. Even if you only need milk, a card will often influence you to buy other things that you do not need, things like chips and candy.
Use Rewards Points To Online Stores
If your card gives you rewards points instead of cash back, do not let them go to waste. A lot of these can be redeemed at online stores. Wait until you actually need to buy something so that you do not waste the savings, and then use the points to buy it.
Buy Coupons Online
You can use credit cards to buy coupons on the internet that can help you save on all sorts of different purchases. These are sometimes random, as the deal may only run for a day, but the savings are huge.