Make The Most Out Of Your Credit Card Without Going In Debt

With Black Friday looming around the corner, it can be tempting to splurge on different items for yourself or for your friends and relatives. And because online purchases are becoming easier thanks to credit card transactions, you might easily go overboard and max out your credit too fast! So if you want to boost your savings without plunging yourself deep into debt, here are some good practices you can do to make cost-effective purchases with your card.

Set a budget

When shopping for any occasion, it’s best to set a budget beforehand. You can use a credit card to purchase an item currently out of your price range, sure, but it still pays to have your repayment plan laid out clearly so you have the budget to pay for it, and maybe buy more items. 

On the other hand, you can also set a plan for people you’ll be buying presents for such as friends and families. Allocate a fixed amount for each person. That way, you save more for yourself while still being able to give gifts to the people most important to you. 

Try using multiple cards

This advice may seem a little odd if you’re looking to make the most out of the upcoming sales while keeping your credit and debt manageable. Try using two different cards for two different purchases. This will allow you to take full advantage of certain benefits and perks afforded to the cards such as cashback options, and maybe even discounts at certain establishments.

You can also try adding a store-exclusive card to your roster if you’ve been using a specific store often for your shopping. The discounts you earn can be used towards bigger savings or even build up credit for another purchase. Travel cards also let you accumulate miles which can be handy if you’re a frequent traveler.

Of course, there is an understandable issue of paying all of it back. Even if you managed to stick to your allotted budget within a solid plan, it can be time-consuming to keep track of all your payment details. Fortunately, you do have some options like debt consolidation which gathers all your high-interest debts into just one payment scheme.

Know your spending triggers

This can be a bit difficult to pin down since it involves some form of psychology but knowing about certain triggers can help you avoid overspending or worse, maxing out your cards. Keep an eye out for these common spending triggers:

Shopper’s High

Based on data gathered by Harris Interactive, 53% of people have attested to experiencing a quick dopamine surge after shopping, which is referred to as “shopper’s high”. Experiencing this elevated mood doesn’t necessarily mean you need to reach for your credit card. Try making small but necessary purchases like, say, replacing a broken appliance with a new item that you can afford.

Manufactured Scarcity

Keep an eye out for certain items that are marketed as “limited stock” or “limited-time-only”. Most of the time, these items aren’t really that scarce and you may still find it at a lower price at other stores. Most flash sales rely on the notion of competition and this manufactured scarcity in order to generate buzz, leading to more sales for the retailer.

Remember that shopping isn’t a winner-takes-all competition. Ask yourself if you really need the item now. Or if you’re only after the thrill of scoring an exclusive deal. Most of the time, if the item is something essential that you need, you won’t have any problems paying for them at a normal price.

Prices

Many retailers like to use vague wording when it comes to their sales percentages. You can see store advertising things like “up to 70%” off” which sounds like a good deal. However, the keyword here is “up to”. It’s possible that they only have one, not-so-good item at 70% off and the rest would be far lower like 30% or 20% off.

Spending to “Save”

This is another trick to be wary of and is quite common in online shopping. Sellers will often have a deal about buying a certain amount in order to take advantage of certain perks like free shipping or other discounts. Be cautious about jumping on these deals. Think about it. Is it worth getting another item that you may not even need just to “save on shipping costs?” Most of the time, just paying for the one item you want and its shipping will still be cheaper than getting two items but with free shipping.

Now, there are instances where spending more to save more can be useful. For example, daily necessities like toilet paper will have great bulk deals to save you money since you’ll be using them daily anyway. It all depends on the situation.

Make the best use of 0% Installment Plans

When buying an item on an installment basis using your credit card, try to get them at a 0% installment plan. This will ensure that the amount you pay would just be the base price of the item, without any interest, letting you save more money on your purchase. Just make sure to abide by the terms and conditions set by your credit card issuer.

Pay the full amount due on time

When working on a tight budget, it might be tempting to just pay the minimum amount due on your card every month. As much as possible, pay the full amount on time. It helps you clear your debt faster and could boost your credit score too!

Of course, it may seem counterproductive to increase your credit card payments when you’re trying to save, but you ultimately end up paying more in interest if you just pay the minimum amount every month.

Look into a balance transfer to a low-interest card

Some cards will let you transfer your balance to another one with a lower interest rate, allowing you to pay off any debt you accumulate while shopping faster since you’ll be putting more money into paying off the principal amount rather than the interest accrued.

Of course, this isn’t the only reason why people might want to transfer the balance from one card to another. Sometimes, it’s also a good idea to transfer if your new card would give you better benefits such as cash-back options you can put for your daily expenses.

However, you still need to do your due research as you would now have to carry a monthly balance when you transfer. In that case, you ideally need to pay on time and the full amount owed monthly so that any surprise charges that might arise don’t harm your finances too much.

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This coming holiday season, sales from your favorite shops and retailers could open up very tempting doors for you to part with your cash. If you stay mindful and strategic about your purchases and spending, you can walk away from the aisles or the online website with some new things that make you happy while still keeping your finances and savings intact.

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