I wish I had stumbled upon this great little secret long ago. I'd be even more money ahead in the bank. I use this technique diligently now and it works great for keeping me out of credit card debt.
Unless you are irresponsible you are much better off using a CreditCard instead of a DebitCard.
Here are the Rules:
- Only use a card that charges NO ANNUAL FEE.
- Only use a card that charges no interest WHEN YOU PAY YOUR BALANCE IN FULL EVERY MONTH.
- DECIDE THAT YOU WILL PAY YOUR BALANCE IN FULL EVERY MONTH.
a. Cut your card up the first month you fail to keep rule three and join the club of un-savvy debit card users.
- Use your credit card like a debit card. Very Important Rule
a. WHENEVER your credit card is used log the amount spent in your checkbook like you just wrote a check. Use the last 4 of the card as the check number and adjust your account balance to reflect the reduced amount. When your credit card bill arrives you will know you have the money available to cover the full amount. There won’t be any STICKER SHOCK at the amount owed when the bill arrives. RULE #4 IS THE MOST IMPORTANT RULE! especially important is diligently recording your CreditCard transaction into your check book ledger!!!
- Finally, when your credit card bill arrives, sit down with your checkbook ledger and reconcile your credit card bill with your check book ledger. Like balancing your bank account statement. Then write the check for the full amount! Your credit ratings will soar!
Here are the Benefits:
- An excellent credit rating.
- A float on your money especially if you have an interest bearing checking account.
- A built in buffer that makes it hard to accidentally bounce a check.
- Free air miles, cash back, or any of the other incentives a credit card company offers to use their card.
- Protection and an advocate if a merchant attempts to rip you off or simply drops the ball.
a. When my wife and I were a newly wed couple I bought her a mail-order sewing machine. The machine never arrived even though my check was cashed, and there wasn’t much I could do about it.
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I use my credit card for every purchase I can, even paying bills. And, I record the use in my checkbook ledger and adjust the balance just like I have written a check. It works great as long as you don’t abuse its use by buying things you would not otherwise buy or accumulating more and more debt where you are paying for the privilege of using the card with high interest rates. That is what the banks are counting on! Be smart! Let the bank pay you instead of you paying the bank! If you can’t be smart then enjoy your DebitCard and forget about using a CreditCard…