Tips on Being Frugal – Paying with Cash or Credit Card?

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Here are some tips on being frugal.

Some credit cards are free from annual charges, and they even give you back 1%.

If you spend over $10,000 a year, that’s a nice gift of $100.

$2000 a month is a normal credit card bill for a family, which can result in $240 savings per year! It may not sound like much, but that’s easily a dinner for four with wine, desserts, and tip. You can even buy a small computer Netbook with the money.

$2000 is easy to rack on your card when you add up everything from gas, to groceries, and even putting your utility or cell phone bills on auto-payment.

When shopping, always ask “if you pay cash, will you get a discount?” Merchants get dinged a few percentage points for accepting credit cards, so they might even offer to save you 5% or even make the purchase “tax-free”. (The merchant may not record the sale if you pay cash, but that’s not your problem)

If they say no, then whip out your credit card… and you just saved 1%.

Put every purchase you make on your credit card, from a $1.95 Starbucks coffee to your annual car insurance!

“No Sign” Credit Cards

If you don’t like signing credit card slips, then charge $20 to your credit card to top off your Starbucks card. I don’t like doing that because, like a phone card, they now have your money. Their sale is guaranteed… you still have 20 bucks to spend.

A lot of merchants now use the “no sign” method for credit card purchases under $25.

There’s even a new type of credit card with the chip, and all you have to do is “tap” it… sort of like the RFID used in key tags at gas stations.

You are probably still gasping at a $2000 per month credit card that needs to be paid in full.

However, if you always live within your means and always pay off your credit balance in full every month, then a credit card is a great financial tool and one that will make you money.

A cash back or reward credit card doesn’t work if you DON’T pay it off every month. The interest on the charges (i.e. anywhere up to 30%) will more than kill off any rewards (i.e. 1%) you can ever get.

Use your credit card wisely.

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March 15 2009 10:32 pm | Credit Card

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