When shopping with a credit card, consumers spend an average of 18% more than they would while paying with cash or a debit card. And no wonder: Credit cards are convenient to use, and technically they allow you to spend someone else's money. That makes them potentially dangerous for people who tend to fall short of budgeting goals. But for those who keep a closer eye on their credit budgets, how frequently should they pay off their card balances?
In the previously recorded Facebook Live video below, Motley Fool analysts Michael Douglass and Nathan Hamilton answer a user-submitted question about strategies to pay off balances and manage debt levels better.
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Michael Douglass:Ryan asks, "Is thereany harm in using yourcredit card for every single purchase andpaying it off immediately thereafter?" The way I'minterpreting that is, buymovie tickets on the credit card,pay off the credit card balance that night.Nathan Hamilton: If there is any harm,then I'm doing a bunch of harm myself,because that's how I treat my credit cards. Now,I don't pay them off every day, there's no impact there. Douglass: There's a level of work that requires,effort that I would much rather put towardsomething like doing the dishes. Hamilton: Yeah. But,getting at his question, using your credit card fornormal charges like gas, tickets, entertainment, dining, everything, andearning rewards and paying off your balances, whether you do it every day, every ten days, if you do it once a month before the due date, you'renot going to incur interest charges. Definitely, that issomething that we advocate for. If you are earning credit card rewards,I don't see any sense inspending to earn rewards and getting charged interest at far higher rates.Douglass: Yeah. You'remaking 2%, but you're spending 20%,which means you're losing money. Hamilton: Yeah. There'sno way he's going to harm himself by paying off those transactions. Douglass: That said, take a night off. Maybedo it once a week or something. Giveyourself a little bit of free time