How to Use Credit Cards Without the Temptation of Overspending

This is a guest post by Mr Credit Card from www.askmrcreditcard.com. Mr Credit Card has read my debt reduction story and the story of how I went from swearing off credit cards to earning over four hundred dollars in cash rebates! Today, he offers a few tips for folks who have gotten into credit card trouble before on how to start using them more responsibly. If you are looking for a new card, please read his best credit card offers and deals page.

Credit Card Users Fall Between Two Extremes:

Nothing divides the personal finance world more than the topic of credit cards. There are obviously two camps. The pro credit card folks love using them for rewards (very often frequent flyer miles). They usually pay their bills in full, charge a lot to their cards, and find all sorts of loopholes to get free airline tickets and upgrades. They hang out at forums like flyertalk and know the ins and outs of airline miles credit cards.

Then, on the other end of the spectrum are folks who hate credit cards. Most of the time (if not all of the time), they have gotten themselves into credit debt. They feel that having a credit card in their wallets presents a temptation that is too difficult to resist. And they swear never to use credit cards again. They are very strong about their views and urge folks not to ever use them. And guess what, if you feel that way, then it is best not to carry a credit card.

The “Happy Medium” of Credit Card Use:

But there is another group that falls in between. And I think Ben falls into this group. This group of folks have gotten into credit card debt before. They have probably gotten out of credit card debt through sheer will and debt snowball methods. But unlike the anti-credit card crowd, they accept that their own behavior was responsible for their overspending. Some like Ben have successfully gone back to using credit cards and paying his bills off fully. Heck, he even used a 0% balance transfer credit card to reduce his interest payment. And there are folks like Ben who want to take the step back into using credit cards (for various reasons like convenience and perhaps to build a credit history) and want to do so in a smart way. In the rest of the post below, I would like to suggest a couple of techniques that can get folks to using credit cards “safely again”.

The premise of this tactic relies on the following. Of all the things that we spend money on, some are out of necessities. Things like our mortgage payments, rent, spending on food, gasoline. And there are the other “discretionary spending”. The folks who are anti credit card all say that having credit cards make them overspend. In my opinion, most of this “overspending” occurs on “discretionary items”. After all, having a credit card could not possibly cause you to spend more on an item like gasoline.

Take Advantage of Your Credit Card:

So here are steps you can take to get back. First, get a credit card and use it just for “stuff you will spend on every day”. Start with the small stuff like utilities, cell phone bills, phone bills, internet bills, cable TV. Sign up for auto pay and get these bills automatically billed to your credit card. Now if all you do is to charge these bills, you can actually not even carry your credit card. And if that is the case, then there simply isn’t any way you can overspend!

Once you are comfortable with this set up, the next step will be to use your credit cards for gasoline and your groceries. But before you do that, you have to get into the habit of actually planning for your supermarket shopping. You need to make a list and get coupons to help save you money. Then plan your week such that you do your supermarket shopping and fill your gasoline on the same day. This will be the day that you take your credit card out of the drawer and into your wallet. Use it at the supermarket and gas station.

The rest of the time, you can keep your credit cards in your drawer. I actually think this is a great “compromise” and “baby step” for folks who have gotten into credit card debt to get back to using credit cards responsibly. By using them only for “things you would have to spend anyway”, and keeping it at home the rest of the time, you get the benefits and rewards of using credit cards without the temptation to go crazy with it.

Let’s Summarize the Steps:

  • Get a credit card and just set on autopay all your bills (utilities etc)
  • Do not carry your credit card in your wallet initially
  • Once you get used to it, use it at the groceries and gas station
  • Keep it at home if you are not going to the supermarket and gas station (and btw – you might as well follow Ben’s example and use a cash back credit card.
  • Only when you have beaten the temptation bug should you carry it in your wallet all the time
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    2 thoughts on “How to Use Credit Cards Without the Temptation of Overspending”

    1. I love the idea of using the cc’s to your advantage… but it makes me nervous to open that door! I love paying cash for everything now… it is so refreshing!

    2. Credit cards are just like borrowing off from your future income – buy something today and pay it in the future. This is kind of risky, especially if you do not have a stable source of income because you are assuming that there’s be an inflow of cash at a time when you’re not even sure about the probability of this happening.

      I had to learn it the hard way when I realized I had thousands of dollars in debt to pay; and not knowing where to get the money. I ended up having stressful, sleepless nights and when I couldn’t take it anymore, I decided to act on it.

      For three years I paid off over $50,000 worth of debt by selling things, and cutting up cards to avoid temptation.

      There are still some debts to pay but it is now lesser compared to the harrowing situation before. And if things turn out the way I plan it, it would only take two to three more years and I’ll be debt free with the exception of the mortgage.

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