My life used to be a financial mess.
I spent my days in class, my nights at the bar, and my mealtimes at restaurants. I spent far more than I made and I didn’t really care. All that mattered was that I had enough money to pay my rent and (hopefully) make minimum payments on my moderate credit card balances. If not, I’d finagle a balance transfer – robbing Peter to pay Paul. Seriously, it wasn’t good.
Looking back, I acted like a complete idiot. I’ve definitely matured since then, both personally and financially. And while I’m pretty darn good at taking care of my money these days, there are still times when I suck.
Breaking My Own Credit Card Rules
Holly and I share all of our money and divvy up the financial responsibilities. She is generally responsible for taking care of our personal finances while I handle all the business books and paperwork. Then, we have our monthly money meeting where we discuss our month, and that’s that.
Whelp, I ashamed to say that I failed in my responsibilities this month. Of course, I had to put my tail between my legs and let Holly know. Here’s how the conversation went down:
“Honey, I have a confession to make. I may have accidentally paid the business credit card 2 days late this month.”
“You did what?!?“
“I know. It’s totally my fault. I’m sorry… Also, I may have been charged a $39.00 late fee.”
“Yeah, sorry. I’m really pissed at myself.”
“Well, since you’re the greatest husband that ever husband-ed, I’ll let you slide this time. But don’t let it happen again.”
So, that may not be word for word, but you get the idea. Also, I maaaaay have brought this up while we were at our kids’ gymnastics practice. I figured being in public could lead to less of incident. Bravo to me, right? #marriageexperience
7 Rules for Using Credit Cards Effectively
So yes, I broke my own rules for using credit cards. Worse, I got hammered with a late fee for doing it. But what are my most important rules for using credit cards? I’m glad you asked!
1) Pay On Time
Paying your credit card bill late presents a whole host of financial problems. Not only will you get whacked with a late fee, you’ll end up owing interest besides. If you’re really late, it could even hurt your credit score, and I know you don’t want that. If you know me, I’m stingy AF, so it really burns me that I screwed this one up.
2) Pay Your Balance in Full
Others may tell you (correctly) to pay more than the minimum balance due. I’ll go one better – pay your balance off in full each month. The last thing you want, especially if you’re chasing credit card rewards, is to pay interest charges. That’s going to cost you more money and devalue any points you’re trying to earn.
3) Don’t Buy More Than You Can Afford
One way to ensure you can pay your balance in full is to never charge more than you can afford. In fact, you should always have enough cash in your accounts to cover your credit card bills. Generally speaking, we try to pay our credit cards off several times a month. That way, we know the balance is always paid on time and in full. Plus, we have the cash to cover our purchases. Another option is using an app like Debitize which handles all this automatically.
4) Get Rewarded
If you’re going to use credit cards anyway, you may as well get rewarded for it. Be smart about the cards you use so you can build points and cash back to spend on things like travel. Additionally, don’t get wrapped up in card loyalty. Find the best credit card rewards or bonuses, then use those cards. (Note: Regardless of which card you’re actually using, keeping your oldest card open is usually a good idea. This extends your credit history so your credit score stays higher.)
5) Don’t Spend More Than Usual
Speaking of credit card rewards, it can be tempting to spend more than you normally would to earn additional points. Don’t. This is one of the biggest mistakes I see for point chasers. If you overspend, the real value of those points is lessened. Worse, you may have to carry a balance (which means paying interest) or dig yourself into debt (which totally defeats the purpose). At that point, you could have saved the money and paid for the trip instead. Even if you’re not chasing points, stay vigilant. Using a card lessens the pain of purchasing which leads to overspending, so be careful.
6) Check Your Statements
Whether you’re paying your credit card bill or your cable invoice, make sure that your statement is correct. I can’t tell you how many mistakes I’ve found on bills over the years. We’ve literally saved thousands of dollars just by checking our statements. Additionally, you may also find monthly charges or subscriptions you no longer need or didn’t know you had.
7) Avoid Credit Cards if You Struggle with Debt
When used properly, credit card rewards can help make travel and other experiences more affordable. When abused, credit cards can destroy your finances and rob you of your freedom. If you’re struggling with debt or have abused credit cards in the past, it’s probably best to just steer clear of them. Only you can be the judge of your own habits. If you think you can’t handle it, don’t even try.
Let’s face it, our world is turning into a cash-less society. Whether you’re interested in points or not, chances are you’ll be using a credit card sometime soon. By strictly adhering to the rules above, you’ll save yourself a lot of financial pain and heartache. Break the rules, and you could find yourself buried in debt.
As for me, I’m thankful I have such an understanding wife. She’s also a badass. Since we’re never late, she simply called the bank and asked them to remove the late fee. They did immediately, no questions asked.
Whew. I’m glad that’s fixed. Now, it’s time for me to go pay that credit card bill again!
Have you broken any of these rules lately? How do you feel about using credit cards? Let us know in the comments below!