For savings in the future, gaze deeply into your credit card bill
By Dana Dratch | Published: December 12, 2017
Ever busted out last winter’s coat and found a $20 bill in the pocket? With a little work, you can find more cash in your budget than by rummaging through pockets or tossing couch cushions.
You just have to target and redirect money spent “out of inattention,” says Kate Levinson, author of “Emotional Currency.”
As you organize your finances for the coming year, these eight tricks will plug financial leaks and find extra cash:
1. Eliminate anything not actively bringing joy.
From soccer leagues in which your kids hate the coach and you hate hauling them to practice, to dinner with “friends” whose company you don’t enjoy, stop devoting time and money to activities that aren’t bringing happiness, says Manisha Thakor, founder of MoneyZen and author of “On My Own Two Feet.”
“It’s my favorite place to look” for found money, she says. She gave up a house with too much square footage and too much upkeep. “I ended up downsizing and being so much happier in a smaller space,” says Thakor.
“You just have to target and redirect money you’re spending simply out of inattention.”
2. Eliminate unneeded add-on credit card products.
Some cards come with or accumulate add-on charges such as fees for a credit monitoring service.
Look at what you’re paying for and what you’re getting. “In some situations, it’s worthy of reconsideration,” says Bruce McClary, spokesman for the National Foundation for Credit Counseling, an accrediting agency for nonprofit credit counseling companies.
“This comes down to the same advice I give people: ‘Read your billing statement carefully,’ because you can uncover a lot of charges you’re not aware of.”
3. Review subscriptions.
From magazines to Netflix to your gym membership, chances are your credit card is covering automatic charges you’ve forgotten about. Go through your card bills and bank statements, says Thakor. Are there outdated subscriptions no longer serving you?
For Levinson and her husband, it was a $30 monthly charge for a service that helped locate classmates for an upcoming class reunion.
The couple was not using the service anymore, but since it billed under a corporate name that included the word “rewards,” they mistakenly thought the charge was related to services from their rewards card.
Once you’ve done that, you can also use a free app such as SubscriptMe – which scans your email for recurring bills and reminds you when subscriptions are coming due – to maintain your progress.
4. Put the brakes on overbuying.
We’ve all done it. You stock the fridge for the week, then get busy and eat out a few times. Before you know it, you’re tossing food gone bad. Or you need something for a project, but after you buy and use it, you discover you had what you needed in the closet all along.
“Throwing away food is a red flag that you’re overbuying,” says Levinson.
- Shop your pantry and your fridge first, then make a budget and a shopping list based on your real life.
- Before you hit the stores, look in your closets to see if you already own something that would fill the same need.
- Build eating out into your budget instead of feeling guilty about it.
5. Switch to fee-free services.
When you use an out-of-network ATM, you expect to pay an extra fee. But you might be paying other convenience fees without realizing it.
If you pay by credit card for rent, mortgage or utilities, you may also face convenience fees for each transaction. Fees of 2 percent or 3 percent are common. Open your eyes: “It’s amazing the money we’re spending without knowing we’re spending it,” says Levinson.
Identify which services cost extra. Can you navigate comfortably within the “free” list? If not, you have three choices: Switch, find a different bank or pay the fees.
6. Negotiate better credit card terms.
With a lot of credit cards, especially rewards and travel cards that tout generous benefits and sign-up bonuses, annual fees are waived the first year. From the second year on, you pay to carry that card.
Video: Negotiating a lower credit card interest rate
If you’re paying on time and have a good credit score, ask your card issuer to waive the fee, says McClary.
“They can always say ‘no,’ but you’ll never know if there’s a ‘yes’ out there if you don’t pick up the phone,” he says.
If you ask about other card terms, you also may get your wish. Among those who asked, 87 percent received a late payment fee waiver and 69 percent got a lower interest rate, the survey found.
7. Track your spending.
Whether you use a credit card, debit card or cash, start tracking your spending “so you know where all the money goes,” says McClary.
Another way to follow your money: Log in regularly to banking and card accounts to make sure your receipts and records tally, he says. Do it daily, weekly or at whatever interval works best for you.
8 Stop carrying card balances.
It’s tempting to roll over balances for a few months, especially when paying off your bills would pinch your budget.
A September 2017 CreditCards.com survey on credit card debt found that 28 percent of Americans fail to pay their card bills in full each month. Of those who carry a balance, a striking 43 percent said they’ve carried a balance for two or more years.
With the average credit card APR at 16.15 percent as of December 2017, that’s at least an extra $34 every month in interest alone.
Carrying a balance now? Make a plan to pay off your debt, says McClary. Then charge only what you can pay off immediately.
A few options to get you started may include:
See related: 6 free tools to stop recurring card charges, Guide to rising credit card interest rates
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