It seems that there are fewer people carrying cash these days than ever before. Life may look very comfortable when you don’t have to worry about a bunch of bills in your pocket (or even A purse in your pocketThat’s why).
But low-income people can be hurt when companies falter in cash, and workers who rely on cash advice – even if you aren’t in any of these groups – can harm you because it’s easy to get into a financial problem with credit cards.
Studies demonstrate that people spend more when using credit for cash, and that late payments are increasing.
“You have an out-of-sight phenomenon and credit cards,” said Amy Bucher, director of behavior change design for Mad * Pow, a design advisory group. “Unless their credit card balance is verified on a daily basis, most people do not realize the amount of debt they are recording.”
But if used responsibly, credit cards are a quick way to build credit without paying ten cents of interest. Good credit scores can save you money on the road, and usually prepare you for lower mortgage or car loan rates. Credit Card Rewards It can make the things you buy a little cheaper.
Good news: mind tricks, apps, and tools can make spending with credit cards similar to cash, giving you the best of both worlds.
Opening note: The financial product ratings described in this article are independently determined by Wirecutter, a New York Times company that reviews and recommends products, and has not been reviewed, approved, or otherwise approved by any third party.
Make buying credit cards feel touch
Cash requires you to shop at a physical store, take over your physical wallet and deliver physical money. Giving the cashier a bill of $ 20 for an item of $ 18 is a tangible transaction. For $ 20, you now have two dollars remaining and virgin natural.
But the credit card looks the same before and after the operation, which leads to the mystery of what has already been abandoned to this Babylon. addition Online shopping To this mix, you may not think about your credit card or where the money comes from.
Grab a receipt. Beverly Harzough, a credit card expert and consumer finance analyst for the US News & World Report, always takes a receipt. “It is only one thing to help you maintain reality,” she said. When they ask if you want a receipt, you just have to say “yes”, so you have that feeling of push in your hand.
Remove payment information from your computer. Consumer psychologists refer to creation friction Meaning the barriers to doing something – as an effective way to stop the buying process. “If you were sitting on the sofa, you had two glasses of wine, you see Rain boots “On sale, your credit card information is filled in automatically, you will likely buy it, because you really only need to press two buttons to make this purchase,” said Ms. Bucher. “If you have to get off the sofa, pull out your credit card and write down the numbers, and that’s friction. You have to stick a little more to making the purchase.” By contrast, Digital payments like Apple Pay provide convenience When you are on the cash register, but they take the money And Physical cards from the equation. If you are concerned that your phone might be held next to the scanner to complete a transaction, it may turn you into a rescue process, so don’t participate.
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Setting spending limits
You cannot buy $ 300 headphones If your portfolio contains only $ 100. But you can if you have a card with a credit line in excess of $ 300 (even if $ 300 exceeds your budget).
Let the robots count your money. Budgeting applications Just as you need a budget ($ 84 a year) or track mint balances (no fees) across all of your accounts, giving you a clearer picture of your actual balance even if you have multiple cards and accounts from different banks. Some banks, such as American bank, It also allows you to sync other accounts, even if those accounts are with competing banks. Check your app balance to make sure the next purchase fits your budget.
Try “planning for action”. Set your budget, then implement measures that prevent you from exceeding it. The Uber credit card It has a feature that allows you to create a self-imposed spending limit for specific categories or merchants, which could remove the temptation to stop at Starbucks on your way to work. Other companies, such as Discover, Let you set up alerts if your credit card balance exceeds a certain amount or you are close to your credit limit.
Delaying late fees
Whether your bill is due or you don’t have the money at hand, blowing on your due date may often mean Late payment fee is $ 39 And the punishment of A.P.R. (An increase in your interest rate, usually the reason for late payment). You are unlikely to incur late fees. You can set up automatic payment (more Major credit card companies Display) that payments be automatically deducted from the savings account or verify your selection before your bill is due. Paying your full account balance via automatic payment is a way to avoid overdue payments Interest on balances.
But, for good reason, it might also be an anti-automatic payment. If you don’t have enough money when your bill is paid automatically, you can get it Mrs. Harzog said the overdraft fee (usually around $ 35), and automatic payment may cause you to stop checking your data, increasing the odds you miss an incorrect fee. If so, there are still options.
Set up a reminder. Whether it’s a digital calendar alert or a handwritten note on Planned, Create a reminder to verify that your account has enough money – then pay your bill. Some companies, such as Discover and Chase, can alert you by text message or send you an email before your due date, a feature that Ms. Bucher uses. She said, “I treat my inbox as a to-do list, so I don’t delete the email until I pay my bill in full.” “When I pay it, it’s really good to delete the email.”
Make billing part of your routine. Whether you choose to pay your bill when writing your monthly rental check, or every Monday morning when you arrive at the office, build it in your schedule.
Credit cards are still not for everyone, and even the best psychological tricks may not work for you. “No one should feel the pressure to use a credit card,” said Ms. Harzog. “If that’s not comfortable for you, start using the discount until you get used to the card payment structure, and go to the credit card when you’re ready. If you’re never ready, that’s right. Hold onto the cash, too.”