How To Properly Use Credit Cards

There are few other ways to bury yourself up to the neck in debt faster or more effective than credit cards. A large credit card balance means a large debt balance regardless of whether you may a portion off each month.

These little pieces of electronically coded plastic have been the cause of so many personal bankruptcies and divorces you would think that the credit card balance is the devil’s special financial invention. As messy as your life might get if you don’t handle your credit card balance the right way, they can actually serve a very important purpose.

If you use credit cards properly, you can manage your finances quite well since they centralize your paperwork. This is definitely something you might want to keep in mind as you get closer to tax time. Also, credit cards unify all your spending. Instead of having to chase down different cash transactions, you can just whip out the plastic and all your transactions are reduced to one statement and it is very easy to archive. Of course, all these awesome advantages go straight out the window when you forget to exercise a little self-control when using the plastic.

Here are three tips you can use to save on credit cards. Used the right way, credit cards can actually help you save money.

Pay cash

Discipline yourself from wanting to whip out plastic whenever you have to pay for something. Instead, crack open your wallet and whip out some green dollar bills (like our self reference?). You are probably asking what is the big difference between paying cash versus your credit card balance. Well, by forcing yourself to pay cash, you experience the ‘pain’ of having to spend on your whims.

Cash is more painful to part with than credit cards. When you look at the cash you have, you can’t help but avoid feeling that you worked hard for every coloured piece of paper in your wallet. There is a bigger mental reluctance to spend when you have to use cash. This can result in you making fewer purchases. And all those aborted purchases can add up to quite a heap of savings.

Use zero interest plans

If you find that you absolutely have to spend on something, you can use many zero interest plans offered by banks or merchants. While you’re not saving on your purchase, you are at least saving on the interest your purchase will set you back. Depending on the amount of purchases you make in a year with your card, the savings could be quite huge.

Use credit card balance for big-ticket items only

Discipline yourself to using your credit card balance for big-ticket purchases only. Since such purchases hurt your pocketbook worse than small-time purchases, there is a lot of emotional ‘sting’ involved in using credit cards. You will develop a negative association with using your credit card balance. As a result, you will be more reluctant to use plastic next time you buy stuff.

Plus, when you use credit card balance to buy big-ticket items, you organize your big expenses and it is easier to track them down come tax time. These big expenses might help you lower your tax due come tax time.