Debt Payoff, Saving Money

Rules for credit cards

So I’m going to start off by saying that I DO NOT recommend using credit cards when you’re trying to get out of debt. It is never good to keep using them while you’re in the debt snowball because you will never get anywhere if you still keep adding debt. Think of it as your neighbor shoveling snow on your sidewalk right after you finish clearing it.

It’s an uphill battle that you will never be able to climb.

With that being said, I only kept our credit card uncut after we paid it off so I could get cash back during my Christmas shopping. Robert and I currently have (but seldom, if ever use) three credit cards between the two of us. We each have a discover IT card and a chase card but they are linked for the same accounts. We also have an Amazon store card, but it honestly hasn’t been used since the first month that I got it. The credit card that I decided to use offers 1% cash back on every purchase but from the month of October through December, I get 5% cash back on everything bought at Amazon and Target. Lucky for me, Amazon is where I do every bit of my Christmas shopping now. Lazy moms shopping online, can I get a what what??

I first got a credit card when I needed to build credit fast to be able to buy my first house at 22. Since the day I signed up, I made some rules for myself that has helped me stay out of credit card debt and kept me from paying a single cent in interest.

rules for using credit cards wisely

Get a card that gives back

Whether it’s travel points or cash back that you desire, there is no point in getting a card that doesn’t give you anything for using it. I personally, went with a card that gives cash back for the one that I use during Christmas. As I see it, I get paid to do my Christmas shopping if I do it correctly. And by correctly, I mean using the rest of the tips I have below.

If you like to travel, you can find all kinds of credit cards that offer travel points or even special points (like to go to disney or anywhere you want). We decided to go with cash back rather than travel points because we don’t get a chance to travel much with our jobs so there was no need to have travel points right now. We prefer the cash at this stage in life.

Don’t use credit at all if you don’t have the money now

There is honestly no smart reason to use money that you don’t have. We have learned that lesson when we started our journey to pay off our debt. Debt is so dumb, and it’s not something I will ever recommend to anybody. Piling on more debt is like digging into a deep hole, the more you dig the more you go down.

I only use my credit card for occasions like Christmas, in which I already have money saved up in one of our savings accounts. I also have a plan to spread out the spending between 2 or 3 months as to not overload myself too much. That’s right, I started shopping for Christmas back in October. I literally only use my discover credit card because it offers 5% cash back on Amazon purchases.

Since I did every last bit of our Christmas shopping on Amazon, I figured that there was no problem in getting cash back while I do it. That is of course on top of the 4% cash back that I got by using I tell you, you give this girl an opportunity to get cash back on something that I was going to do anyway and I’m all yours. The whole point of using a credit card when you have the money for the item is only to get the cash back or the points. Then it really could be like you’re getting paid to shop.

Pay the entire balance off

If you decide to use a credit card, the best way to use it is to pay the card off completely every month you use it. This way, you can’t be charged any interest. With most cards having 12-25% interest after the introductory period, you can’t afford to pay that kind of interest.

I’ll give you an example to help elaborate. If you buy an Amazon echo (on sale now for $79) for the normal price of $100 and use a credit card that has 25% APR, you will end up paying more than $100 if you don’t pay it off right away.

You would end up paying $125 for an item that’s only $100 if you waited until the next month to pay it off. If you like to save money like me, losing that kind of money is not ok.

Pay on time

As one of my favorite financial people, Dave Ramsey would probably cringe at this entire post about credit cards, I feel as though it has to be said. Dave would tell you that a credit score doesn’t matter, as it just means that you are good at borrowing other peoples’ money.

As someone in the trenches of paying off debt myself, I completely agree with Dave Ramsey but as a young, married person I’m not so certain that working on your credit score is a bad idea. Like I said before, I bought my first house at a young age because I had a good credit score. I was able to find decent house and get a good interest rate because of the credit decisions I made early on in the process.

I’ve been able to keep my credit score looking good because of one thing. In the few times that I’ve used my credit cards, I’ve made all payments on time.

If you can’t trust yourself, cut it up

Something I may consider doing after this Christmas is shredding some credit cards. The only reason why I was keeping my credit cards before was for emergencies. But, once we started building our emergency fund, and then our other bank accounts to save for variable occasions there is no need for the credit cards.

So with that being said, my final piece of advice when it comes to credit cards is that when you have them paid off cut them up. Like I said in the very beginning, using credit is not as smart as using cash. As far as my Christmas shopping went this year, my convenience was more important than paying for cash for everything.

You’d understand too if you also have a birthday party to plan for in the month of December. My son’s birthday is on the 26th and I’m still trying to figure out how to handle all the stress of a birthday and Christmas that close together. It’s difficult so far for this mommy who absolutely LOVES Christmas, but like everything in life it’s a work in progress.

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