How to keep your cards under control
According to a recent report in the Globe & Mail, while Canadians now carry fewer credit cards, those that they do hold carry heavier balances.1 CBS Money Watch reports that the number of Americans who can afford to pay off their credit cards continues to drop, and just 51% of Americans have enough cash to clear themselves of credit card debt.2
We sometimes don’t have a choice and must rely on credit cards. But if you find yourself reaching for plastic more often than you’d like to, remember that there are ways to make credit card usage safer and smarter – and less costly in the long run.
The Guardian has these tips for keeping your credit cards under control.3
Look for cashback and other offers
Look for offers like the 5% cashback for the first six months on a SimplyCash™ Card from American Express. With that deal, you get 5% cashback on eligible purchases made at selected retailers in the first six months of card membership, up to $250. It is, in a sense, like getting paid to spend – although obviously it makes sense to only purchase the things you really need, even if you are getting money back. Look for other cards offering similar rewards. In Canada, check out CreditCards.com for cashback card comparisons, and in the US visit Nerd Wallet.
If you know for a fact that you can pay off a large purchase within a specified amount of time, purchasing that item on a credit card with, for example, 27 months of 0% interest, means you are borrowing that money for free. Just make sure that you can pay off the full amount within the specified time frame or you’ll be paying off the remainder with the full interest rate, which can be as high as or higher than 18%.
Out of sight, out of mind
A credit card can get you out of a jam, but it can also get you into one. If you know you’re someone who is easily tempted by the availability of credit, leave that card at home. You might even go so far as to freeze it in a bowl of water so it’s truly inaccessible, and using it requires waiting for it to thaw – during which time you might rethink the purchase and the interest you know you’ll have to pay if you spend on credit.
Pay more than the minimum
If you have a hefty credit card balance, try as hard as you can to pay more than just the minimum amount each month. Sure, paying the minimum is all you’re required to do, but that’s what the credit card companies want you to do because it means they’re going to have you paying their outrageous interest fees for much longer than you otherwise would if you paid down more of the debt each month.
Negotiate your interest rate
Your credit card company may not be willing to lower your interest rate, but it never hurts to ask. Do a bit of research before calling to find out what interest rates other companies offer, and don’t take the first “no” for an answer. Ask to speak to a manager and politely continue to escalate your request up the chain until you’re talking to someone who has the authority to consider making the change you require. Try calling again in a month or so if you don’t get the answer you’re hoping for.
If you are concerned about your credit card debt and other financial issues, and you want to speak to a professional who can give you some advice, don’t forget that as a Foresters Financial member you have access to Everyday Money, our toll-free financial helpline that connects you to an accredited counselor who can help answer your questions about your personal financial matters such as debt management and budgeting.