How to Use Credit Cards Less

Credit card debt is continuing to rise. In the United States, for example, the average credit card debt balance is $16,048. If you want to avoid that kind of debt, make a commitment to use your credit cards less frequently. Begin by looking for credit card alternatives, such as cash and debit cards. Budgeting and looking for cheaper substitutes for items you buy can help you save money. If you’ve accumulated debt, use debt consolidation or a debt management plan to pay it off quickly.

Part 1 Finding Substitutes for Credit Cards

1. Make use of cash. Cash is convenient and widely accepted. Furthermore, using cash instead of credit results in a 15% reduction in spending. Remember to withdraw cash directly from your checking account rather than using a credit card, as you will be charged a high interest rate.

Of course, you should not carry large amounts of cash with you, as this will make you a target for thieves. You can, however, carry as much cash as you normally would on any given day.

2. Obtain a debit card. You can only spend the amount of money in your bank account with a debit card. When you exceed the limit, your card will be declined. For a debit card, contact your bank.

Debit cards have some advantages over cash in some situations. For example, if the card is stolen (or if you lose it), you can report it missing and the account will be frozen.

3. Get a prepaid debit card. If you are unable to obtain a debit card linked to your bank account, you can obtain a prepaid debit card. You will manually load cash onto the card, either at a cash register (such as Wal-Mart) or through an ATM machine. Visa’s AccountNow Gold Prepaid Debit Card and American Express’ Bluebird are two of the most popular. PayPal offers a prepaid debit card as well.

To use a prepaid debit card, you will be charged transaction fees, maintenance fees, ATM fees, and live customer service fees.

Examine the terms and conditions of the debit card with the same care that you did for your credit cards.

4. Make use of a secured credit card. A “secured” credit card functions similarly to a debit card. You put money into your account, and you’re given a credit line equal to the amount you put in.  Look for a secured credit card online.

Many secured credit cards have monthly and annual maintenance fees. You’ll also be charged interest if you don’t pay off your charges before the grace period expires.

5. You can pay with a personal check. You could pay your bills with credit cards, which is convenient. You can, however, open a checking account at a bank and use personal checks. Set up a checking account with a bank or credit union.

Some prepaid debit cards also allow you to use paper checks. AccountNow Gold Visa Prepaid Card and American Express Bluebird, for example, both offer checks.

6. Make use of an electronic funds transfer (EFT). When shopping online, you may be able to pay with an electronic funds transfer. This deducts funds from your checking or savings account. It’s a good option if you’re trying to cut back on your spending.

You might be hesitant to give a company your bank account information. In general, only use an EFT if the person on the other end of the phone explains the procedure and asks for your permission.

If you’ve never used the vendor before or if they contacted you, don’t give them your banking information.

Part 2 Spending Less

1. Find less expensive alternatives. Determine what you buy the most. Take out your credit card statements and look over what you’ve spent. Do you spend the majority of your money on necessities like food, utilities, and gas? Or do you spend your money on movies, books, and restaurant meals? Look for less expensive alternatives.

Instead of purchasing books, visit your local library.

Instead of eating out, purchase a new cookbook and prepare meals at home. To save money, buy generic brand items.

Instead of meeting friends at a bar, host a get-together at your home. You can play cards while drinking non-alcoholic beverages.

Rather than buying new clothes or furniture, shop at thrift stores to save a lot of money.

2. Make use of coupons. Coupons can be found as inserts in your local newspaper. Cut them out and hand them to the cashier at your local grocery store or pharmacy. Coupons can also be found online, though you may need to print them.

Some stores will double your coupons. They may do so on a regular basis throughout the year, or they may do so every day of the year. Look it up on the internet.

3. Stay away from instant gratification. Credit cards make it simple to give in to every desire right away. Experiment with deferring your gratification. You can, for example, wait 30 days before purchasing something. If you see a new handbag or a set of golf clubs that you like, make a note of the date and wait a month. Your desire is likely to fade.

4. Find new ways to relax. Many people spend money on stress relief. They go straight from work to their favourite store and take out their credit cards. Find healthier, less expensive ways to unwind after a long day.

Go for a brisk walk around the block. Strenuous exercise will boost your mood and take your mind off work.

Close the door and lower the shades to practise mediation. Concentrate on your inner peace.

You can read or watch movies. These are excellent ways to broaden your knowledge while also relaxing.

5. Take your credit card information out of your online accounts. Your credit card information will be saved in your profile by many online retailers. This makes purchasing something whenever you visit the website simple—too simple, in fact. Delete all credit card information from your profile. This will cause you to take longer the next time you go online to buy something.

6. Put your credit cards on hold. Make it difficult to reach your credit cards in case of an impulse purchase. One possibility is to freeze them in a bowl of water. Though you can thaw them, it will take a long time, and your buying impulse will most likely have passed by then.

You can also “freeze” your credit cards by contacting the card issuer and requesting that the account be frozen. However, because it is simple to call back and unfreeze the account, using a bowl of water may be the best method.

7. Unused credit cards should be closed. Americans, on average, have four credit cards. The more credit cards you have, the more tempted you will be to charge them all. As a result, you can cancel some unused credit cards.

Recognize that closing a credit card will have a negative impact on your credit score. Ideally, you should only close a card if there are no outstanding balances on any of them. Closing a card raises your “utilisation” rate, which is the amount of available credit you are using. When you close a card, your available credit decreases, so your utilisation rises if you have any balances.

If you have more than ten credit cards or if your spending is completely out of control, close one of them. Though your credit score will suffer, you are most likely already in financial distress as a result of all of your credit card debt.


Part 3 Paying Off Credit Card Debt

1. Consolidate your debts. Debt consolidation saves you money by repaying high-interest debts with a lower-interest loan. For example, suppose you owe $5,000 on a credit card with a 24.99 percent APR. You will save money if you can obtain a loan for the same amount at a lower interest rate.

Go to a bank or credit union to look for a personal loan. If your credit is less than stellar, credit unions are more lenient.

You can also look for a credit card that allows you to transfer your balance. In most cases, these have a 0% APR for 6-24 months. You can then transfer your high-interest credit card debt to your new card and pay it off quickly.

2. More money should be saved. To pay off debts, you must reduce your expenses so that they are less than your income. Create a budget to account for all monthly spending.

It’s also a good time to break bad habits. You are spending a lot of money because of your smoking or drinking habits. Get rid of the cigarettes and alcohol. Both your bank account and your health will improve.

Try putting aside a small portion of your paycheck each week or month. Then, as you develop a healthy saving habit, gradually increase that amount.

3. Increase your earnings. If you can’t cut any more expenses from your budget, you’ll need to increase your income. Take on a part-time job or freelance work on the side. Pursue a hobby, such as writing or photography, so that it is enjoyable.

You can also increase your income by selling your valuables. Hold a garage sale or list your items on Craigslist or eBay.

4. Pay more than the minimum credit card payment. If you only pay the minimum, your credit card statement should tell you how much you will be charged and how long it will take you to pay off the balance if you only pay the minimum. Attempt to double your payments and pay that amount every month.

If you have debts on multiple credit cards, start with the one with the highest interest rate. Pay the minimum on all cards and then apply any additional funds to the card with the highest interest rate. Once you’ve paid off that card, transfer your payments to the next-highest interest-rate card.

5. Speak with a credit counsellor. If your spending is out of control, you should consult with a credit counsellor. They can look over your debts and devise a plan of action. Locate reputable credit counsellors in your area by visiting credit unions, universities, and housing authorities.

You can also work with a credit counsellor to set up a debt management plan. They will work with your credit card companies to lower your interest rate and waive any fees or penalties. After that, you will make a single payment to the credit counsellor, who will distribute the funds to your creditors.

Debt management plans are not suitable for everyone. For example, you cannot use your credit cards or obtain new loans while on the plan.

Examine the credit counselor’s fee to ensure it is reasonable. You should be aware that you can negotiate with your credit card companies on your own. Call them and ask if penalties and late fees can be waived.

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