Financial Tip of the Day:Strategies for Using Credit - NFCC Financial ...

By Drew Kessler

One of the greatest challenges we face using credit cards is that using them does not ?feel? like spending money.?Through advertising and the media, society tells us that if we want it, we can have it.? Yet if we are going to learn to live within a budget, we must completely re-think our use of credit.? Here are some tips to help you change the way you think about and use credit:

?Use Debit Cards Rather Than Credit Cards

A debit card gives you the flexibility of a credit card but feels like you?re spending cash.?It comes right out of your checking account immediately.?Here are some suggestions when using debit cards:

?a. One person/one account.? If two people are debiting the same account, neither one knows how much money is in the account.? If it?s a joint account, you will need a system for keeping a single record of transactions.?Mistakes or omissions are more likely in that situation.?

b. Keep your receipts.?Your receipts enable you to keep track of your transactions.?You must keep them to be able to balance the account.?

c. Keep track of the paper checks you write on a debit account.? The key to using a debit card wisely is to keep close tabs on your transactions.? That can require a bit of effort because you are probably writing some paper checks as well as making electronic transactions.??You need to keep track of both, preferably in a single register.??

d. Have limited overdraft protection on a debit card account if you don?t plan to write any checks on the account. ?Many banks have overdraft protection by which an overdraft simply turns your debit card into a credit card.? While it seems convenient, it?s really a bad idea when you are trying to stick to a budget.?Try to avoid these by setting your card up so that when the money is gone from the account the card stops working.? In other words, if the money is not in the account, you can?t spend it.?This only works well if you don?t write checks on the account.?If you do, overdraft protection is a must.

Drew Kessler is Vice President of Marketing & Communications with the National Foundation for Credit Counseling.

Views expressed are the personal views of the author, and do not represent the views of the National Foundation for Credit Counseling, its employees, its members, or its clients.

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