Strategic Use of Credit Cards

I have have several credit cards and use them regularly.  Here are my do's and don'ts of using credit cards.

Do's

• Use the credit card as a substitute for cash available to spend.  Charge only what you can afford to pay with cash, i.e. pay off each  month.
• Pay off the credit card balance before the due date to avoid late fee and interest charges, which can be very high. 
• Favor credit cards that don't charge an annual fee.   If an annual fee is charged, select cards where the annual benefits (e.g. annual free hotel room voucher) is greater than the fee.
• Choose credit cards based on benefits such as cash back, reward points, benefits such as trip insurance.
• Use credit cards to build credit score, which lowers insurance rates and interest for car and mortgage payments.
• Check the statement at least every month to ensure no errors or mistakes.  

Don'ts

• Don't use a credit card if one does not have enough funds to pay off the charges by the due date.
• Don't use a credit card if the merchant charges a convenience or surcharge fee.   Pay with cash or check instead.
• Don't use a credit card if the merchant gives a discount for cash or check. Pay with cash or check instead.
• Don't miss the due date or only pay the minimum amount.  Interest charges will accrue.

Additional recommendations:

• Create an online account, which allows checking the account more than once a month to confirm purchase and refund amounts.
• Use bank bill paying services, which is usually free, to receive bills electronically, which is faster than U.S. mail,  and pay electronically which is faster and saves postage charges.
• Pay off balances weekly prior to receiving the monthly bill. This makes the charges feel more like using cash. 

For more on Strategies and Plans, check back every Monday  for a new segment.

This is not financial, spending, credit score nor credit card advice. Please consult a professional advisor.

Copyright © 2025 Achievement Catalyst, LLC

Benefit of Paying Credit Card Balance Every Week

I've started to pay several of our credit cards every week, before the bill is sent.   I do this because I share 3-4 credit cards with family members.   Since I don't know what they are spending, I check periodically to see the balance on the card, so that I will have enough funds to pay the monthly bill.

Since I check the bill, I decided I might as well pay the balance, even though it is not due yet.  That way I don't forget or miss paying a large bill when it comes.  In addition, I am effectively spending on a cash basis, since I pay the balance every week.

Paying the balance weekly may also increase one's credit score since the percent utilization is lower when the monthly bill is issued.  Bonus!

For more on Ideas You Can Use, check back every Tuesday for a new segment.

This is not financial nor credit card advice. Please consult a professional advisor.

Copyright © 2025 Achievement Catalyst, LLC

Living within our Means - Paying with Cash

3 Steps back to the sanity of cash by MP Dunleavey shares a story of how she and her husband chose to purchase replacement appliances with cash, instead of credit, and how it made them more fiscally responsible and personally satisfied.

To me, paying with cash was a great way to improve our personal finance habits. When I graduated from college, being on a cash basis helped me learn to manage my finances. We use the principle of paying with cash to simplify our budgeting process and to stay within our means when buying a car.

Essentially, paying with cash created more financial discipline because it was a limited resource, and thus choices and tradeoffs needed to made by us. For example, due to limited cash, we sometimes needed to decide what to buy, and what not to buy. Thus, paying with cash helped us learn to live within our means.

For more on The Practice of Personal Finance, check back every Wednesday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2009 Achievement Catalyst, LLC

Cash or Credit

Earlier I wrote that I buy only what I need and I pay with cash. There are two exceptions I have to the "pay with cash" principle.

First, we didn't pay cash for my house. We took out a mortgage for 60% of our house. We could have paid cash, but we didn't want to use up a significant portion of our savings. In 2003, interest rates were also at 5.5% for 30 year mortgages. However, we are working to pay off the mortgage in about 15 years. And we are considering paying it off in the next 2 years for reasons to be explained in a future posting.

Second we use a credit card for convenience. We charge most of our regular expenses (e.g. groceries, gasoline, clothing, gifts, and entertainment) to a credit card and pay off the entire balance every month. We use credit cards that have no annual fee and either points or rebates. I don't check the interest rates since we always pay off the balance. Currently, we carry only 3 credit cards and that may even be too many. We each have the card from when we were single, Discover and VISA. We added American Express because that is the only card Costco accepts. We never ever carry a balance nor pay interest.

On large purchases, such as furniture, appliances, or services, I always ask if there is a discount for paying cash. About 90% of the time, there is a 2-3% discount, which amounts to $20-30 per $1000 spent. My spouse is reluctant to ask for a cash discount, but I am always happy to ask. As a colleague once told me, the worst they can say is "no." And very few people are say no nowadays. If there is a discount, I pay cash. If there is not a discount, I use the credit card and take the rebate or points.

This is not financial advice. Please consult a professional advisor.

Copyright © 2006 Achievement Catalyst, LLC