Control your Cards
It is important to approach credit-cards with the right mind-set. They are incredibly useful, but you need to handle them very carefully.
The Banks’ Perspective
Banks make their money by lending you money; you repay the original plus interest. Banks will fall over themselves to give you a credit-card if you are anything except bankrupt on the credit score scale. Banks also make money by charging retailers a fee every time they accept purchases using their one.
In the banks’ ideal world everyone would have a fistful of credit -- all maxed out and every person would only repay the minimum each month. The banks are then coining it from all the interest each card holder pays, their shareholders are happy and you will never get any grief from any of your card issuers.
You want the facility to use the card rather than to pay cash and you want to do so without paying any interest or charges. You get this as long as you pay everything off in full every single month. Luckily for the banks in most cases a person’s resolve slips and they let the bill carry over at least sometimes.
The Best Approach to Your Credit-Card
Only have one
One means one bill and one payment date, so it is harder to forget or overlook a payment. Yes, use credit cards comparison charts and sites to choose one that gives you points or money back, but choose ONE.
Cash is wonderful stuff, everyone wants it. If you move your accounts to a cash basis you will never be in debt because when you run out of money you stop spending.
Remember - Never Pay for Anything
When you use the card remember that what you take home is not paid for yet. It is only paid for when you pay your credit card bill off in full; they call it a statement, but think of it as a bill. Only cash pays bills.
This is the main reason that people end up with credit debts. They flash the card, get the stuff and think that the stuff is paid for. They forget about the debts they have already run up this month and flash the card again and again . . .
Set Cash Aside
Make a rule for yourself that you will only use your credit one if you have money in the bank to cover it. When you get home move money across to your credit card account immediately. If that is too much hassle then at least withdraw the cash from an ATM and put it in a box to pay the card bill (statement) when it arrives.
Use a Debit-Card
Almost everywhere that accepts credit cards also accepts debit cards. If you do not want the trouble of carrying cash around then just take your debit card with you instead; your debit-card only allows you to spend money you have in your account, so it is nearly as good as cash.
Plan Before You Use Your Credit-Card
We all plan ahead if you were applying for a bank loan, yet most of us fail to plan our credit card debt. Most of us don’t even think about it being debt and the card companies discourage us from doing so until it is too late. (Why else do they call their bills statements?)
One technique is to lock your coneaway in the freezer in a large ice-cube. Milk works better than water because you cannot read the numbers on the card until the milk thaws out.
Never use the Internet with your card in your pocket. Give your wallet, debit cards, charge cards and credit cards to someone else while you are online.