If you’re trying to save money for a down payment for an auto loan, changing spending habits can be a useful way to save a little more than usual. As credit cards make up a lot of our debt, that’s what we’re covering today.
We asked our Simcoe auto loans team to share some habits to help spend less with credit cards anyone can change while trying to save money.
Credit cards and savings
Credit cards are a double-edged sword. On one hand they are very useful in managing everyday finances and rebuilding credit. On the other, they are a very easy way to spend money and to get into debt.
We often recommend using credit cards for rebuilding credit but with some specific behaviours attached. We will include these in this post.
Here are a few ways to help reduce credit card spending while you save up for that auto loan down payment.
Treat credit cards as debt cards
A step we often recommend to spend less with credit cards is to treat a credit card more like a debit card. That means not depending on credit and paying it back whenever and thinking more about whether you have the money to pay for what you’re buying right now.
You can still use the credit card and get the credit score boosting bonus, but make sure to pay off the balance every month the same as you would make sure there is money in your debit card account.
Don’t take credit cards out with you
Until you can make that mental shift towards treating credit cards as debit cards, leave them at home. It means you can’t use them for everyday purchases but it also means you cannot use them for impulse purchases either.
It’s worth more to stay out of debt and take a little longer to rebuild your credit score than to get into more debt while you’re trying to save!
Give your credit cards to someone you trust
Give your credit cards to someone you trust. Your partner, sibling or whoever you go out shopping with most often. Should something come up and you need the car, it will be there.
In the meantime, someone else has your card and can add their willpower to yours to help you change habits and spend less with credit cards.
Close all card accounts bar one
From a purely credit building standpoint, having multiple credit card accounts adds more freedom to your credit utilization ratio. From a changing habits standpoint, it may be better to just have a single card.
With one card, you have a single balance rather than being able to hide purchases across several cards. It’s a minor advantage but one well worth taking if you can.
When these spending behaviour changes begin to take hold, you should quickly find your existing card balances going down, which means you can afford to put more aside for your down payment.
Not only can you save faster this way, you can also rid yourself of destructive spending habits, which has to be a good thing right?
For those of you who know that you have a challenging credit situation, please visit Dixie Auto Loans where we have a team of credit specialists ready to help you get approved for a car loan today!
For any questions or concerns, please don’t hesitate to contact us here!