Thursday, April 16, 2009

Thursday Thrifty Tip: Use Credit Cards Wisely

Frankly, I was annoyed...maybe even taken aback after I read a "penny pincher" tip in our local newspaper about credit cards. Almost so fired up that I wrote a letter to the editor, but of course, I refrained and instead will complain to my loyal readers. (Love you guys.)

Last week "Donna's" column read:
Credit cards: I like to pay my bills when they arrive so that I am two weeks ahead of their due date. I also like to pay a little extra each time. It's suppose to look good on your credit and it saves me money. Credit card interest is high, so anything I can do to reduce the principle helps.

Seriously...living frugally or thrifty is living WITHIN your means. I'll say it again, WITHIN your means. When did it get "ok" to just charge it; pay for it later?

I understand that everyone is in a different financial situation (especially these days). Some of you have made poor decisions in the area of wants and needs in the past and now find yourselves in credit card debt. Others have had emergency situations arise (medical, job loss, etc.) that required some assistance of using a credit card for a few months to get back on their feet. (We've been there.)

But using credit cards daily WITHOUT the intention of paying off the monthly balance CAN and WILL BE financially costly. The amount of credit card interest rate varies and can cost you more than the item you purchased within a few months.

I can not stress to you all enough: USE CREDIT CARDS WISELY. Can you pay off your balance this month? Is the item you're purchasing a want or a need? Can you wait and save the money to buy the item outright? Ask yourself this question every time you use your charge cards and make sure you pay your balance in FULL each month. If you can't, make a plan and stick to it to get yourself financially free from the credit card companies.

I'm I preaching to the choir? Can I get an AMEN!

From inside the little blue bungalow,
Katie Jean

4 comments:

Karen P said...

AMEN

Anisa @ the Schell Urban Homestead said...

Katie Jean - you sure call them as you see them. Thankfully! I wish more people did!

We used to have a CC that we put all our bills on and then paid off each month so Rick could earn points for free stuff at his favorite hunting store. It was great for a few years. We never carried a balance.

But, after some medical stuff and financial changes, we began leaning on that card a little (and then a lot) too heavily. We were putting our health insurance premiums on it, and were no longer able to pay it off each month.

Now we have debt (this is the first time for me), which can sometimes feel overwhelming and like we're being eaten alive. The premiums now auto withdrawl from our checking (so the debt has stopped accumulating). But, it's a constant struggle to figure out how to pay more on the card to get rid of it once and for all. (All the money we save from being thrifty in other areas is getting shoveled towards the balance, finance charges, intrest...).

Once it's paid off (and it will be by the end of the year, or sooner), it will be destroyed.

A lesson learned the hard way for us unfortunately. We will use cash savings as our back up plan from now on. I watched my parents dig themselves in and out of the credit card hole throughout my childhood. I don't want that for my kids.

Thanks for speaking up.... and I think you SHOULD write to the editor. So many people don't even know they are drowning!!

Nancy Cook said...

Great post KJ.

Most of us recall the days when Credit Cards were more appropriately called "charge cards". It is not mistake that your charge card companies changed the name to better market their product.

The reality is that you are "charged" extensively to borrow money in this manner, and it is a more effective way for most people to destroy their credit than build it.

And what do you need credit for, really, if not to increase your ability to rely upon it more?

We have one card in our home- AMEX- we use it solely to book travel. The travel insurance is cheaper, and most rental car, airlines and hotels require a card to secure a reservation. If I could find a way to rid myself of it as well, I definately would.

Anisa @ the Schell Urban Homestead said...

@Nancy - most debit cards that have the Visa or MC logo on them can be used as "credit cards" for places like hotels car rentals, etc. That is what I used before we had real credit cards. They never charge them, unless you ask them to, or unless you damage something.