When I first entered the working world, one of the first things I wanted to do was get a credit card. For me, it was like an affirmation of my status as a working person. It said that I’m now an adult with more money to spend than I earn! I could spend now and pay later!
Many adult years down the road now, I’ve pared down my credit cards to just a couple (mostly due to the service tax) and other than some monthly charges I have on it, I hardly use my credit card anymore, and I find it liberating! So my money tip of the day is to control your spending by using cash, not card.
My personal reason is thus : I don’t like charging lots of small expenses to my credit card and at the end of the month, receive a large bill. Without realizing it, small expenses do add up, and they are like a snowball rolling down a hill. It really grows without you realizing it!
I now use cash when I pump petrol (also for security reasons), when I do my grocery shopping, or at restaurants (unless they offer attractive discounts when payment is made by card) In general, I pay by cash where possible whenever I make purchases under RM200.
I also pay my utility bills by online bank transfers instead of using the auto-debit feature on credit cards. This gives me more control over the amounts I pay and to ensure I can check and if necessary, dispute any bills before payment is made. Using the auto-debit feature, it’ll be all sorts of hell trying to claim a refund from the bank or the utility company.
I do realize that when you use your credit card, you accumulate reward points. Most credit cards offer you that. However, over the years, I’ve learnt that these “reward points” do not translate in anything except some crummy electrical goods which hardly even cost much these days, or paltry sums of cash vouchers. I used to use the points to offset annual fees but these days, most banks are happy to waive your annual fees if you use your card regularly i.e. at least once a month.
By not using my credit card often, I have more control over my funds and I do not get a heart attack when my statement arrives. Rarely do you now hear the anguished cry of “What?! My credit card bill is so high! What did I buy?!” emanating from my lips.
I also find it easier to budget and when an emergency strikes e.g. a stone just hit my car windshield and caused it to crack, I know I have the spare funds to get it repaired, without having to live on bread and water next month. At least I’d know that whatever I’m spending now is money I already have instead of “virtual money” on the credit card. That’s money that exists ex potentia.
I do still use my cards of course. I do not carry a lot of cash with me (again for security reasons) and sometimes, it just makes sense to purchase items with a credit card e.g. online purchases, large purchases, attractive discounts with cards or when travelling !
But in the main, I control my spending by using cash wherever possible. Its worked for me! 🙂 These days, we also have the option of having a debit card which I think is great coz that’s like cash without the hassle of carrying cash! I still don’t have one though LOL
Are you an avid credit card user? Or do you find yourself using cash more than your credit card? Will you cut back on the use of your credit card or are you dependent on it?