How to Save Money with Credit and Debit Cards

These days hardly anyone carries cash on them. It seems like everything, from the daily coffee to the family car, is bought with plastic. It's convenient and it's easy. But as we all know, "convenient" and "easy" usually equal "expensive."

• Use credit and debit cards sparingly
  - This is easily the best way to save money. Carry a small amount of cash on you at all times for those quick purchases you may need to make. But make sure it's a small amount and make sure you keep track of it. At the end of the day write down how much you spent in cash so that you know where your money is going.
  


• Know when to use credit and when to use debit
  - Obviously you won't use a debit card if you don't have enough money in the bank, but for those purchases that could be covered by either debit or credit cards, you should know which one to use. Many banks charge a small fee for each debit transaction. At my bank I get ten debit purchases per month for free, and then each additional one costs 25 cents. It doesn't seem like a lot, but those additional charges can add up. If it's a small purchase, one that you have the money to cover right away, use a credit card wherever possible. That way you won't incur an additional service charge. Make sure you pay off those small charges on the credit card right away, or the additional interest you pay on the card will negate the savings.


• Negotiate
  - Call your bank and ask them if they will reduce of eliminate any debit card service charges you may be paying. Call your credit card company and ask them for a lower interest rate. You'd be surprised at how often you'll get what you are asking for.


• Have a plan
  - Whenever you put something on a credit card, make sure you have a plan for how you are going to pay it off. Ideally you would want to pay the card off immediately, but that is not always possible. Before you buy something figure out how much it costs and how many monthly payments it will take until the item is paid off. Keep interest in mind. Credit card interest can be very expensive.


• Don't just pay the minimum balance
  - Paying the minimum balance may keep the credit card companies from coming after you, but it's not getting your items paid off. All you're doing is paying the interest. Always pay more than the minimum due, unless there is absolutely no way for you to pay more. Come up with ways to save enough money that you can pay even a few dollars more than the minimum. That way you'll at least be digging yourself out of the hole a little bit.


• Get rid of cards and services that you don't need
  - If there are any credit cards that you don't regularly use, think if you actually need them. If not, get rid of them. Having additional cards will only encourage you to spend more. The same goes for any additional charges you are paying for on yoru card. If you don't need the additional insurance coverage, credit protector coverage, roadside assistance, or whatever it is you are paying for, get rid of it. The same goes for any banking charges you may be paying for.


• Transfer outstanding debts to a low-interest card
  - If you have large debt spread across several cards, work with the credit card companies to consolidate that debt onto the card with the lowest interest. You should also try to negotiate that interest rate down.