How many of us even carry cash around anymore? Credit and debit cards make shopping easier, and you worry less about someone stealing your money. But sometimes that ease of use is, well, too easy.
Leaving the cards at home offers you two straightforward benefits. It helps stop you from spending the cash you have and, worse, spending the cash you don’t. Here’s how.
Cut Down on Impulse Buying
When you carry cash and leave the cards at home, you’re putting a limit on your spending. You can spend only what you have on you, which will be more limiting than access to your entire bank account or to however much money is available on your credit card. And, if like me, you have more than one credit card, shopping for things you might not even need becomes so much easier.
It’s easier to stick with a shopping list if you only have enough money with you for the items on that list. It’s pretty hard to justify impulse purchasing something off the clearance rack that you don’t really need if it means putting back something—like actual food!—you do. Next time you head to the store, try taking cash. On vacation, if you want to protect your money, use debit only, so you’ll spend only what’s available in the banks.
Stay Out of the Credit Card Trap
Credit cards make it dead simple to buy things, but it’s all too easy to fall into overspending. Not only do you end up spending money you don’t have, but then there’s that pesky thing called interest. Even with good credit, interest rates are quite high these days. If your credit is not-so-great, you might face a 20%+ rate.
If you don’t pay off your total amount due on time, you’ll accrue more debt and pay even more as you accrue interest on the higher amount. For most credit cards, if you pay everything off at each statement, you won’t have to deal with interest. But ff you pay only the minimum amount due, you set yourself up to fall into the credit card trap.
While very careful and calculating use of a credit card with excellent rewards—like a generous air miles program or a cash-back system—can be really great for people who have a tight rein on their spending and budget, that’s not such a great option if you’re wrestling with your spending habits. In that case, even if you have the money available to pay off the card each month and dodge any interest charges, it’s probably wise to still leave the card at home and avoid any temptation to overspend.