The credit card! Who doesn’t like paying for things with a piece of plastic rather than having to sadly remove all of that cash from your wallet? But credit cards could be a dangerous tool if not used properly (that’s partly why we’re in this economic mess!). If the credit card bill is not paid on time, the company will start to charge you interest—and a lot of interest. Some credit card companies charge up to 30% in interest just for making a late payment! Credit cards are a huge, but troublesome part of our financial lives. It is amazing how we can pay for our rent, grocery and electric bills and just about anything with a small piece of plastic as opposed to using real, paper money. Many people use credit cards due to some of the following reasons:
1. People prefer the easiness and simplicity of paying for items with credit cards.
2. People do not have the cash and must resort to credit cards to pay for things.
3. People want to keep track of exactly what they spend to the penny.
These reasons, especially reason #2, are totally justifiable in terms of why people use credit cards. Now credit card usage is fine if the balance is paid in full and on time every month (easier said then done!). But because of the tough economic times and with millions of people unemployed, it is becoming a necessity to use credit cards. But if people had savings, they would not necessarily have to use credit cards to survive if they had been laid off from their job. Savings often act as the solution to financial problems. As for reason #1, cash has its benefits—you don’t have to sign the receipt like you do with credit cards!! As for keeping track of what you spend, it’s a good idea to write down the cost of each item you purchase everyday, which will keep track of your expenses. Then, add each day’s expenses up, and enter it into our Expense Calculator. If you really want to achieve a sound savings fund and get out of debt sooner, it is best to limit your credit card use.
So if you’re unemployed right now and relying on credit cards, you may need to cut you’re spending because credit card companies are lowering credit limits, which hurts your credit score (by raising your debt-to-credit limit ratio). The lower credit limits also leave you with less money to spend. This means you must go on a complete spending diet. This could include selling your home, renting a cheaper apartment, selling some of your belongings and eliminating bills such as cable television and Internet. As the adage goes, “drastic times call for drastic measures”. HelpSaveMyDollars.com is trying to encourage people think green (cash) instead of plastic (credit cards). First, it will cut your spending if you use cash only, since if you’ve spent most of your cash, and you don’t see anymore cash in your wallet, then you certainly can’t buy anything! As opposed to credit cards, where it is easy to forget how much you’ve spent, which leads to a huge and unpleasant surprise when a very thick and lengthy credit card bill arrives in your mailbox. Plus, credit cards will cost you money, even if you are late with one payment due to late fees and interest, which can be over 20% at times. Also, lately credit card companies have been raising customer’s interest rates by a large factor—sometimes without notice! Remember, 35% of your credit score is paying your bills on time and your score will decrease significantly if you inadvertently forget to make a payment on time. So as you read this, try to ease up on the credit cards. With some time and effort, you’ll soon be more inclined to use cash and you won’t have to worry about late fees and interest anymore!
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