During a recent discussion about credit card rewards, Lifehacker Managing Editor Virginia K. Smith and I found ourselves with a shared lament: We get swipe happy when we know we’re earning credit card rewards.
It isn’t that we’re sitting here bajillions of dollars in debt wondering why we don’t have enough points to upgrade to first class. It’s more a general sense of unease, that this type of credit card usage could one day come back to bite us — or more likely, just make us less aware of our true spending habits.
It’s time for us to take a step back and think long and hard about what we’re doing.
In June, we’ll spend a month without our trusty credit cards in an effort to curb our spending and reflect on our charging habits. Think of it as the little sister to the no-spend challenge. If you joined us for No-Spend January, perhaps you’re ready for a winter financial challenge?
The ground rules:
- Auto-charge subscriptions are fine; we’re focusing on preventing one-time online and in-person transactions
- Nonrefundable travel expenses that need to be booked now can go on your credit card
- If you want something, you have to pay cash or debit. If you don’t have the money on hand, you can’t buy that!
But it may be harder than we expect to turn off that part of our lizard brain that says “Points are mine, must earn!”
At the end of the month, here’s how we’ll rate our success:
Bronze Status: You trim back your card use, but choose to charge necessary expenses at places that have your card on file. You use your credit card three or more times for purchases beyond recurring payments and travel.
Silver Status: You opt to pay with PayPal (connected to your debit card, obviously) to avoid using your credit card for online purchases. You use your credit card up to three times during the month.
Gold Status: You leave your card at home, bury it in your sock drawer, or freeze it to keep it out of the payment picture and go the whole month without using credit.
Here’s Virginia to explain how she’ll approach the month:
"I get a lot out of my Chase Sapphire points — I’ve booked so much free or discounted travel with them this year — but I wonder a lot if it’s worth it, given how much extra money I tend to spend if I’m using credit instead of debit. When I’m charging something on a credit card, I catch myself working off this nebulous idea of what I can generally “afford” in the grand scheme of things, rather than basing my decisions on whether or not I can actually afford that thing right now. This leads me to slightly overspend all the time. Not so much that it’s a major problem, but also it’s a habit I’d like to break. So! Ahead of a big trip to Europe at the end of June (hello, points travel), I’m going to spend the month of June operating with my debit card only, and uh, hopefully living more frugally."
- Virginia K. Smith, Managing Editor, Lifehacker
As I’ve become more and more comfortable with my overall financial health, I’ve become more comfortable charging everything and paying the whole balance at the end of the month. Or most of the balance at the end of the month. Usually the whole balance at the end of the month.
You see where I’m going here? If I would just use my debit card (or, gasp, cash), I wouldn’t have that sense of dread come statement time.
And look, while we’re being honest about things: I overspent when I got my current card that I otherwise love. I did not have $4000 worth of actual necessary expenses in exchange for that sizeable sign-up bonus. But I hit the minimum spend, and now I have a personal loan (with a lower interest rate than the card) through which to pay back my sins.
I just paid off my car loan, and am pivoting my debt payoff to my remaining student loan and That Dumb Personal Loan That I Hate So Much.
Points be damned. The true prize I seek is a notable end-of-month surplus.
Do join us, and share your strategies for getting through this no-credit month and making smarter financial choices.