Photo by Kindel Media
There’s no doubt that credit cards are convenient. They’re compact, easy to carry and work just about anywhere. And that’s the problem. What seems like no big deal on a daily basis can add up to one whopping surprise at the end of the month.
In the event you have fallen into a mind-numbing “coma” that has you swiping the plastic with abandon, today I have a few tips, tricks and secrets for how to get back on track and in control of your plastic.
Stop and think. Unless you pay your credit card 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 iPad or a TV. If that’s what you really want, show some personal discipline and restraint. Save the money to buy it.
Get rid of all cards but one. Hopefully, that will be the one credit card 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, albeit 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 be many years.
Note: Creditors must apply any credit card payment above the minimum to balances with the highest interest rate. The minimum payment, however, can be (and typically is) applied to the balance with the lowest interest rate, which will usually include balances with a promotional interest rate.
Toss new offers. Did you really think credit card companies are interested in giving you something for nothing? No way. Throw away all offers that show up online or in the mail. Don’t even read them and you’ll avoid temptation.
Read statements carefully. Look out for hidden charges, such as credit insurance, administrative charges and mysterious fees. Question everything and ask that these weird charges be reversed.
Don’t pay for theft insurance. You don’t need it. If your credit card is stolen, you’re only liable for $50 at most, anyway. And forget credit card 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.
Use the right envelope. If you send your payment via U.S. mail, always use the envelope provided in your statement when mailing your payment. It contains the most current mailing address and has barcoded information that will speed it through the processing system.
Zero balance. Last, and possibly most important, pay off your credit card balance each month. You’ll avoid frittering away thousands of dollars to interest and fees every year.
Mary Hunt is the founder of EverydayCheapskate.com and the author of the book “Debt-Proof Living.” https://www.everydaycheapskate.com/contact/, “Ask Mary.”
