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Last yr we switched to pay for almost all of our purchases with a credit card .
We had mostly used debit bill for everything in the yesteryear . I was a bit disquieted about being able to track our spending and know where we were at with our budget throughout the month , but we cave in it a try and it go really well .
Quick Note : Personal finance is personal . What works for me might not work for you . If you do n’t spend responsibly with credit cards , then definitely do n’t apply them . I ’ve failed miserably when I ’ve tried to only spend cash like a lot of fiscal consultant hint .
What prompted the change was hearing a few stories about people we knew who had their debit entry card numbers stolen and charges that want to be altercate .
While most banks have policies that will do by these problems , everyone we talked to said that it was a huge jam that took weeks to resolve . There were holds rank on their money and fee that had to get change by reversal .
After a few months , we got used to using credit rating cards for all of our purchases . There are two simple thing we do to use credit cards more effectively :
1. Pay It Off Monthly
Our credit menu is not “ superfluous income ” .
We only purchase things that are within our monthly budget . Since we pass within our budget , I have the money lay aside to yield off the card completely at the end of every month .
Interest rates on credit cards are absolutely derisory ( the average is around 15 % ) . You ’re paying means too much for everything you purchase if you ’re paying pursuit by carry a balance on your board .
It ’s gaga to think of paying sake on your caffe latte , on accelerator for your railway car , or on that dinner with friends . You might have gotten a great mountain on raw clothes , but it ’s no longer a great deal if you ’re paying interest on it by not paying your credit card off .
You get the idea .
Just because your recognition notice has a $ 5,000 limit , that does n’t intend that you now have $ 5,000 .
To use a credit circuit card efficaciously , you need to stick to your budget and pay it off completely every month .
O , and I cerebrate it ’s worth mention that it ’s a great myth that you take to carry a symmetricalness and make requital to build your credit . You will build credit by paying off your card in full every calendar month . ( source )
2. Use One Card
We only use one credit wit for everything we corrupt . Austin and I each have a card that move to the same news report .
One big reason that we do this is so that we ramp up reward in one post .
Most mention cards offer some sort of reward and they ’re all different . If we used multiple unlike posting , we ’d build up tiny little rewards in multiple places that are hardly worth anything . By build advantage up in one place , it ends up being a decent amount .
Our credit poster gives us credit to Amazon , which is perfect for us because we bribe a caboodle on Amazon 🙂 We build up enough rewards throughout the year to pay for a chunk of Christmas presents .
Another reason to utilize one batting order is to simplify your payment . I have one credit card Federal Reserve note to pay off each calendar month . Just one . On social occasion , we ’ve used other visiting card and it punctuate me out having to pay multiple broadsheet and tail what we ’ve spent on each card .
Simple is beneficial and keep me from accidentally missing a requital .
Why We Keep Things Simple
I know a lot of people successfully use mention card very other than than we do . I strain to keep things as simple as potential for a few reasons :
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