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I’m Working to Pay Off My Credit Cards, Should I Still Use Them?

Feb 23rd, 2021 • Lisa W.

Congratulations! You have committed to paying off your credit cards in full. You made a plan and you are sticking to it. But it is a journey and there may be something that you are overlooking along the way.

Like many, you may still be using your credit card for purchases even as you are working to pay the balance off completely. For example, do you have all of your various monthly subscription charges on your credit card? Even if you are paying off the amount of the new charges each month (and then some!), you are still paying interest on these new charges from the moment they occur.

So long as you have an outstanding balance, there is no interest free “grace period.”

The ability to use your credit card for purchases and not pay a finance fee only exists if you do not carry a balance from month to month. If you charge $450 (which is about the US average) to your credit card this month, that will actually cost you about $457 (assuming an 18% annual interest rate). And yes, this cost is more than you will earn from the usual 1% cash back reward. While $7 a month is not a huge additional sum, it does add up over the course of a year.

There may certainly be very valid security reasons why you may at times favor using your credit card for a purchase rather than a debit card. However, aside from avoiding an unnecessary expense, the advantage to using your debit card is that you “feel the spend.” Even if you are diligent about paying off new charges each month, there is no match for the sensation of seeing that sum leave your bank account in real time. And that may cause you to think twice about that expense!

For more guidance like this, try a Hey Money subscription! For just $19.99 a month you can talk to an expert like Lisa and work with them on your debt pay off journey. Click here to learn more.

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