Be careful of the credit traps that many credit card companies use to real consumers in. Yes, they use bonuses to attract consumers who accept these spending magnets, thinking that it will save them money. Will it? Yes, credit card bonuses force consumers to head to the store to relinquish the bonuses, giving them an excuse to justify the purchase. But, do you really need the bonus or are you using the incentive to make an irrational purchase appear to be rationale?
Credit card companies use different tricks to lure consumers into become spenders. To avoid these traps, it is time for the secret to be exposed. Consumers need to be empowered with what to watch for. You need to protect your money and don’t fall for some of these traps or spending will be an avid pastime where it will get out of control.
Use Your Own Money
A credit card should be used with financial responsibility because remember that this is not your own money. You are borrowing the money from the credit card company. So, the ideal thing to do is to use your debit card instead or cash, if you have it available. This is especially true if you have a problem with being disciplined in your spending habits. When you have to use your own money, you won’t be tempted to spend it erratically.
Assess Your Purchase
Prior to using a credit card to make a purchase, think about whether you really need the item now or not. If you can put off the purchase until the item is on sale, then by all means do so. Or can you wait until you have saved up enough money to make the purchase with your own cash? This means that you have to assess your purchase instead of making impulse shopping decisions. Before you do purchase an item, consult your spouse or partner, if you are in a relationship. That way, you may get a second opinion to sway your judgment.
Higher Percentage for Cash Back Incentive
You will find that many credit cards will offer you a cash back bonus with higher percentage rates. You may notice this done during specific times of the season. You may also have to spend those bonuses with specific retailers, even if you have never shopped with these retailers before. What if you can get the same item at another retail store for cheaper? Then you wouldn’t need the credit cards’ cash back incentive. So, it is best to compare prices prior to using cash back bonus as an incentive to buy something that is not financially wise.
Store Credit Cards
Store cards are another heavy burden for consumers. Many times, consumers are forced to accept these store cards by the salesperson in exchange for an in-store discount on the merchandise being purchased. Do your research and ask questions first before accepting any signup incentives offered to you in the store. You may get a coupon book in the mail, but the discount amount will be spread out each month throughout the year. So, you cannot use the coupon as you want. You can only use one per month.
You should also be careful of transfer fees that credit card companies add on to 0% introductory credit card transfers. Inquire about any fees charged to transfer credit card balances before making the transfer.