Playing Your Credit Cards Right: 5 Ways to Avoid Overspending
If opening your credit card statements each month is like a perverse form of shock treatment, then it's time to evaluate your credit card spending.
Follow these five tips to get your credit card spending under control and avoid unpleasant surprises when the bills arrive.
1. Too Much Credit Card Debt? Set a Monthly Budget
You might be tempted to blame your credit cards if you're swimming in debt, but the accounts are not the cause of the problem. Your spending is. Create a realistic monthly budget if you don't already have one. If the word "budget" conjures up images of a Scrooge-like money diet, then think of it as a spending plan--a way to get the things you want and create the future you desire.
2. Record Your Credit Card Use
You think you'll remember the round of drinks you charge for your buddies, or the pair of purple sneakers you buy on a lark, but memories of purchases tend to fade as fast as their pleasure. Write down everything you charge on each account and keep the list handy so you can keep track through the month.
3. Put Away Your Credit Cards
Can't resist the urge to spend? Stash your credit cards in a safe place at home except for planned purchases. People who get into credit card trouble often pile on debt through impulse purchases. A $20 purchase here and there every few days doesn't seem like much, but all those little items can add up to a few hundred dollars by the end of the month.
4. Another Credit Card? Just Say No
Maintain only the number of credit card accounts you can manage easily. Most people need no more than two or three credit cards. Decline the deal if a store offers you a discount for filling out a credit card application for an account you don't need. You may pay a little more for your purchases, but you'll save money in the long run if the refusal helps you avoid overspending.
5. Avoid Credit Card Cash Advances
Cash advances on credit cards usually carry a higher interest rate than purchases. Make over your financial life if you're getting cash advances to refill the coffers every month.
Published 07/12/10 (Modified 03/10/11)