It seems too many rely too much on their credit cards to get them through the day. There are a lot of bad habits that credit cards and debit cards encourage that cost each of us a lot more than we realize. Sure, they may seem convenient, but you are surely paying for it.

To protect yourself from being exploited by the credit card issuers, there are some basic strategies you can follow. These 10 strategies can keep your credit card working for you, rather than the other way around.

1. Do Not Use Credit On Food.

One of the strangest things to happen in the last decade is the surge of people using credit to buy food. This could be food at the stadium, at the theater, or at the grocery store. What kind of society are we living in when people think getting a loan for food is considered a sign of financial independence?

It could be said, someone who has to borrow food, is only one step from being a beggar. What happens if you lose your credit cards or you reach your limits? Does that mean you don’t eat?

If you do this, you are in a dire financial emergency. You need to reduce your debt drastically because you are far too depedent on credit cards for basic survival. A credit card is NOT a basic survival item!

2. Do Not Overuse Credit On Luxuries.

Many who get credit cards look at it as a way to get toys and luxuries they really don’t need. While credit and luxuries go back as far as each has existed, financial ruin is always just around the corner for those who indulge in them too much.

While it is fine to use credit on a TV or a computer or a nice kitchen appliance, you want to stay away from trends, fads, and brand names. The last thing you want to do is end up paying for something long after it’s usefulness or value has disappeared.

3. Beware The Impulse Purchase!

One of the hardest things to do with a credit card is to delay gratification. Why wait for that new jacket, when your credit card can get it today? Why wait on that new flat screen when you can get it now? Why wait on that vacation trip when you have plenty of credit available to go next week?

In a society of instant gratification, a credit card can be deadly to your financial future. When you add the peer pressure that mocks or neglects sacrificing or saving, it becomes very easy to just make that impulse purchase. In fact, entire businesses exist on the credit card impulse purchase. Just look at the commercials for the chia pets, the home shopping network, and exercise equipment.

A single purchase a year is harmless. But, too often, it reflects a pattern of behavior that will lead to financial disaster.

4. Never, Ever Use Credit Card Checks.

Credit card companies continually use different tricks to get people to go into debt to them. If you understand how credit cards work, it is easy to see why they are always trying to get you into more debt than you can handle. But, one of the worst ways they do this is with the credit card check.

Basically, the credit card check offers less protection than either a check or a credit card purchase. They subject you to higher fees than either which costs you more. The credit card companies don’t warn you about their drawbacks in any way that compares with their promoted benefits.

All in all, using a credit card check is a bad deal for you. Avoid them if you can!

5. Always Know What’s On Your Credit Report.

If you are going to borrow from someone, it helps to know what information they are using to set the interest rate. You can find out specifically what information credit card companies are using in your credit report. When you use your credit report information, with your credit score, you are in a vastly better position to dictate the terms you expect from your credit card company.

If you really want to get fancy, you could try credit monitoring. If you are in serious financial trouble or plan on getting a lot more credit, you definitely want to look into this.

Remember, credit card companies have all the information and resources at their disposal. You are at a great disadvantage. To improve your access to credit, you need the best information. With your credit report, credit score, and credit monitoring, you have the leverage to get the best possible rates from the credit card companies.

6. Don’t Use Credit For Temporary Items.

The other side of credit is debt. So, whenever you use your credit card, a debt is created that you have to repay. That means you do not want to go into debt for things that don’t last.

It is common for people to use credit cards for concert tickets, gasoline, utility bills, or personal services (e.g. salons, valet, tips, dining). While this is a widespread practice, it is not very financially responsible.

Why?

It is because of the nature of debt. Debt can last a long time. The last thing you want to do is create a years-long obligation for a benefit that is only temporary. All it does is create a greater obligation in the future. You will have to pay not only for your future expenses, but those of today as well. That will lead to a reduced standard of living and greater sacrifices down the road.

This leads to…

7. Use Credit ONLY For Durable Items.

If you must go into debt, use it on things that will give you many years of use. A stove, deck, tools, computer, furniture, and sometimes clothes are good examples of when to use credit. This advantage can be further increased if using credit allows you to get these items at significant savings. This may completely eliminate the interest cost of using credit!

8. Do NOT Use Your Credit Card As A Gift Machine.

In the days of rewards programs, too many used credit cards as a way to get bonuses, rewards, and gifts from their credit card issuer. Debt is not a gameshow. It is serious business because of the consequences of failing to meet an obligation.

The credit card companies are in the business of getting you to use credit as recklessly as possible. If they can get you in the habit of overusing credit to get prizes, it creates a pattern of behavior that may be hard to break in the future, once the prizes are gone.

Do not let the credit card companies change the way you spend. Do not let rewards programs decide the card you choose. Your only concern should be the interest rate and the history of fees, charges, and penalties.

9. Do NOT Use Your Credit Card As A Check Replacement.

Checks have a very long and established place in banking. They are based on your available account balances and do not rely on debt the way credit cards do. While it is true that the banks have GROSSLY ABUSED checking practices, they still do not leave you as vulnerable to financial calamity as credit cards.

Checks are a substitute for cash. In other words, the cash is available, it is just not on you at the time. A credit card is a substitute for a fixed debt. If you replace your check purchases (cash) with credit cards (debt), you are creating debt where none existed before. Since debt carries interest, you could end up paying a much higher price than you ever would have with just a check.

Not only does this leave you vulnerable to a lifestyle of growing debt, but it could also make you MORE dependent on it! Don’t be surprised if it leads to a spending lifestyle that leaves you drowning in debt. The simple way to avoid this is to not use a credit card as a check replacement!

10. Do Not Use Your Credit Cards As A Cash Replacement.

This is probably THE WORST HABIT of credit card users. The nice thing about cash is you always know how much you have and how much you have spent. There is always a sense of responsibility not to overspend with cash, because once it’s gone… you can’t get anything more.

Credit cards are different since all too often, the available credit is far beyond typical daily expenses. This leads to a situation where it seems more convenient to use the credit card to pay for everything, rather than cash since you get 1 bill and it itemizes the expenses. While 1 bill seems convenient, it is actually a trap!

Cash gives you daily information and updates on your financial position. It tells you regularly whether you need to save more or whether you can spend more. It lets you know if it’s time to adjust your habits or whether you can be more indulgent. Cash provides you with an up-to-the-moment status of your financial position at all times.

Credit cards on the other hand hide all this information from you, under the guise of “convenience” or simplicity. This leaves you completely dependent on the credit card company for information about your daily spending habits. And, you only get this information once a month!

If you are using your credit cards to replace cash purchases, think carefully about the consequences of what you are doing. The price may be higher than you think!

You Need To Know.

There are so many ways credit card companies get you dependent, needy, and desperate for their services. Your only chance is to be informed about how they see you and what they are saying about you. That means you must know your credit score and what is on your credit report. If you really want to be diligent, you can try credit monitoring to get updates on any changes.

At the very least, if you follow these 10 suggestions, you will find your use of credit cards, far more effective and productive. It just may prove the difference between a future of financial ruin and one that is predictable and satisfying!

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