So as a money saver I do enjoy catching Dave Ramsey on the radio from time to time to hear what he has to say. Obviously, this guy has some aspects of his program that really work for people. If you do not know who he is you can check him out here: http://www.daveramsey.com/home/. He's all about becoming debt free, and in general, I agree with his message!
One aspect I have heard of his program on the radio is to have people stay away from plastic, i.e. credit cards and debit cards. There is a ton of research that states that people do tend to spend more compulsively when using plastic and I believe it in terms of the general public. However, there are some great advantages to using plastic as well.
1) Instead of cayring a bunch of cash around it is much safer to carry around a card or two. If stolen or lost you can deactivate them and they are widely accepted.
2) Many credit cards and debit cards offer reward programs. For me, I make around $50/month in credit card rewards depending on what type of promotion is offered for the particular month. Right now the 5% cash back with my Chase card is for groceries and I am going to buy those regardless. The Chase Freedom card has worked very well for us
3) If you have a disputed charge with a credit card you can simply call the company and they are likely to work with you. For example, friends of ours bought furniture from Ashley furniture that arrived damaged. They returned the furniture Ashley wouldn't work for them on a full refund After calling Chase our friend's payment was stopped and they were not charged.
4) It is really the only safe way to make purchases online and there are vast savings to be had on the world wide web.
5) With some rewards programs you can get gift certificates worth more than the cash back would be worth which are great for when you need to eat out when traveling or giving as gifts.
6) It builds credit if you use them responsibly.
7) It is easy to save purchase information by just checking your account on-line or on an app on your phone. For me this organizational ability great.
Some tips for not overspending using credit cards.
1) NEVER CARRY A BALANCE!!! I went all caps there on purpose. It defeats the whole purpose if you are using it as a payday loan.
2) Move cash from one account to another as you make purchases. Have the second account set up as the automatic payment account for your credit card and then you are only spending cash that you do have.
3) Pay monthly bills that have to be paid anyway automatically with credit cards. Heat and electricity are prime examples. You might as well take the kick back that you would not get if paying out of your checking account.
4)Do not keep it in your wallet if you are a super compulsive shopper. Bring it with you for outings to the grocery store and only buy items that are on your list.
5) Have only a couple of credit cards that are different. Do not get two different Visa cards as they may not both be accepted everywhere. I personally break this rule a little as I have two credit cards that are Visas and two debit cards that are Master Card (more to come on the debit cards later).
All in all, for the right user credit cards are great secure ways to make purchases. Like anything, they do take some will power. For me personally, I feel it just as much if I swipe the card as if I pay cash because I know and understand that they are all coming from the same pot of money. If your self control is in place credit cards can actually be a way to save money and work on becoming more frugal!