How to avoid the perils of excessive credit card rewards spending

Wednesday, January 9th, 2013 By

Sculpture of a hand holding a credit card.

Credit cards with rewards can be dangerous. (Photo Credit: Public Domain/One half 3544 /Wikipedia)

One of the benefits of having a rewards program tied to your credit card is all the stuff you can earn, from goodies and airline miles to cash back. However, increasing your credit card spending in order to earn these awards amounts to a double-edged sword that can eviscerate your budget. Here’s how to avoid the perils of excessive credit card rewards spending.

Avoiding excessive credit card rewards spending step No. 1 – Stay awake

Right off the bat, the most logical way to ensure that you aren’t letting your credit card spending run amok is to reign in the spending and pay attention to what’s going on your credit card bill. Waving the magic plastic doesn’t mean that you won’t be paying with interest in the end – or in full right off the bat if you plan to avoid interest. Knowing how much you’re spending and how much you owe are imperative.

Avoiding excessive credit card rewards spending step No. 2 – Keep a journal

If you have trouble keeping a mental tally of your credit card spending, write everything down. This is for those who don’t like to view an online statement, but entering the 21st century is actually a good idea.

Avoiding excessive credit card rewards spending step No. 3 – Save receipts

How do you keep an accurate count of what you’re spending? Keep the receipts! You’ll need them if you have to return something, and pocketing purchase records makes it unnecessary to write things down on the spot – because nobody likes those people, honestly.

Avoiding excessive credit card rewards spending step No. 4 – Mint.com

Websites like Mint.com offer comprehensive money management tools that can easily add up and codify your credit card purchases. Link your credit card and bank to Mint.com, and log in whenever you like for an up-to-date statement.

Avoiding excessive credit card rewards spending step No. 5 – Open another checking account

If credit card spending is a serious problem that you’re working on, set up a second checking account – ideally, a free checking account – that is dedicated to paying off the card. Only do this with the second account and it will help.

Avoiding excessive credit card rewards spending step No. 6 – Pay weekly

The standard for paying a credit card bill is to pay once per month. However, to pay a card off more quickly and minimize interest, making weekly payments where you pay off whatever was charged that week is a good idea. You’ll accumulate rewards and avoid having to pay interest.

Sources

Daily Perk

U.S. News and World Report

WiseBread

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