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Dusting Off Your Credit Cards? 5 Things You Absolutely Must Do

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The economy still isn’t perfect, but it looks like most of us have started feeling better about whipping out our credit cards again. If you’ve been one of the many consumers who cut back on your spending, you’re probably looking forward to buying a few things you’ve had on hold.

Hey, this is a natural reaction to deprivation. The National Foundation for Credit Counseling conducted a poll a few months ago that showed that 66 percent of those who responded were suffering from “frugal fatigue.” These consumers said they were tired of pinching pennies.

If things have started improving for you financially, that’s great. But as you jump back into the credit card game, be sure you keep in mind all the good habits you developed when you were on a strict budget.

Here are five things you need to keep in mind while you’re recovering from frugal fatigue:

1. Remember your budget: Okay, I’m sure you know what your budget is because you’ve been living within your means. But look at the amount you have allotted for, say, clothes, and sear it into your brain before you hit the mall.

Just because you’re loosening the purse strings, it doesn’t mean you buy everything you’ve been waiting on for the last two years. If there are some items on your list that are urgent and related to your well-being, they get priority. After you’ve put your needs on hold, it’s so easy to fall into the “I deserve this!” trap. Your mantra: I only deserve it if it’s within my budget.

[Consumer Guide: What To Do If Your Wallet Is Stolen]

2. Track your spending: This one trips up a lot of people. You might think you can keep track in your head, but you can’t. I speak from personal experience here. Use an online money management tool like Mint or Bundle where you can categorize expenses.

3. Don’t revolve a balance: Okay, if you stay within your budget, there’s no reason to carry a balance. This is the slippery slope to debt. Emergencies happen, of course. But for everyday purchases, only buy what you can pay off when the monthly statement arrives.

4. Use rewards credit cards to your advantage: Use a cash back card, like Blue Cash Everyday from American Express or Chase Freedom Visa to get a rebate on everyday purchases. Used responsibly, you can financially benefit from credit cards.

5. Pay your bills on time: This is one of those things that sometimes falls through the cracks. Do whatever you need to do to be reminded of bills that are due. If you use Mint or Bundle, set up payment reminders. Remember that the majority of credit cards have penalty rates lurking in the background. If you pay a bill more than 60 days late, you’ll get hit with a penalty APR. According to a Consumer Action credit card survey, the average penalty APR is 25.69 percent. And that’s a variable rate, not a fixed one.

[Related Article: How Often Should You Check Your Credit Card Accounts?]

Image: Kat…B, via Flickr.com

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