For some people, frugal is a four-letter word. However, being thrifty with your finances, especially when it comes to credit card usage, can be the difference between financial well-being and financial trouble. Living within your means by not spending more than you earn and staying out of debt are keys to smart money management.
But if you have credit cards, can you still be frugal? Yes! In fact, they can even help you be more thrifty. Here are five ways you can practice frugal credit card use:
Paying interest on a credit card balance, especially if you have a high APR, is the opposite of frugal living. Pay off the balance each month. It's the best way to keep your credit card usage under control, and it also prevents you from essentially throwing money away each month on interest.
If you're carrying a balance month to month, make a plan to pay it off as soon as possible. In the meantime, contact the credit card company and ask for a lower interest rate. You can also consider transferring your balance to one with a no-interest introductory period. If you do this, make sure you can pay it off within the specified time frame.
Let your credit card pay you back! There are credit card rewards for virtually everything these days, from gas rewards to cash back to savings on travel and everything in between. If your credit card offers rewards, start taking advantage of them. Some people put the majority of their monthly expenses on their credit cards, and then pay off the balance each month. This way, they get more rewards without the interest.
Credit card use, especially if you’re putting many of your purchases on your card each month to earn rewards, can quickly get out of control if you’re not disciplined. A budget will help with this. Make sure you know how much money you’ve budgeted for each expense, such as gas or groceries, before you start swiping your card. Then, pay it off from your checking account as soon as possible. Some credit card companies limit the number of payments you can make each month, so check with your card issuer.
If you have more than one credit card, work towards paying them off and keeping just one good rewards card. This way, you’ll not only save money on interest, but you can earn more rewards by focusing your responsible spending on one card instead of spreading it over several.
At the same time, having just one card can help reduce temptation to make purchases you can’t afford.
If you often cave to the temptation of using your credit card for purchases you can’t afford to pay cash with, limit your credit card use. Delete saved card numbers from websites and remove your card from your purse or wallet so you’re not tempted to overspend.
Being thrifty is one of the best ways to stay in control of your finances, and these tips will help you stay frugal and responsible with your credit card.