I can help you reduce your credit card spending! Via Shutterstock.
I’m super excited that the first BargainBabe.com reader, who I’ll call Joanne, anonymously submitted her credit card bill to receive free, constructive, and supportive advice to reduce her credit card bill! I have nine suggestions for Joanne that will shave hundreds, of not thousands, of dollars off her credit card bill of $4,985.82.
My offer still stands for anyone else who wants help lowering their credit card spending (see below).
Let’s start with the positive spending decisions Joanne is making.
- She’s good at returning things, from big ticket items to small purchases. This is more significant than you may think, because a lot of shoppers feel guilt about returning items even when they are using a store’s return policy as intended. It also means Joanne recognizes that it’s worth her time to return unwanted items. You go girl!
- She shops at several stores known for their low prices, including Wal-mart, Smart & Final, Amazon, Michaels, and Super Cuts.
- She buys Groupons, which are fabulous deals as long as you use them.
- She buys a lot of groceries, which means she cooks at home often. I wonder if she uses any of our recipes.
- She has a rewards card and is earning quite a lot of points!
From looking at Joanne’s credit card bill, I noticed a few trends, good and bad.
- She uses her credit card almost every single day, sometimes as many as seven times a day.
- She shops at a lot of different retailers, which could indicate she is eschewing brand loyalty to compare prices.
- She shops at high-end stores (Nordstrom) and low-end stores (Walmart and Smart & Final). This reinforces my hunch that Joanne is not just concerned about price, but is value-conscious.
- She had 15 purchases over $100, usually for groceries or medical expenses.
- She likes to go to Target a lot.
- She makes frequent trips to various grocery stores.
What are things Joanne could do differently to lower her spending?
- Chose one day a week where no matter what, she does not use her credit card. No lunch out, no Starbucks, nothing. Just cutting back one day a week will punch down her bill noticeably. I should know, my month-long spending moratorium was a real challenge.
- Consolidate trips to Target. Joanne made 18 separate purchases at Target on 12 different days (there were multiple purchases on some days). My hunch is that on many of these trips, she went to Target to buy one or two things on her list, then got sucked into all the great merchandise. It’s certainly happened to me a LOT. If Joanne reduced her Target shopping trips to once a week (she could even earmark one day of the week to shop the bullseye), she would likely reduce her overall Target spending significantly because she would only go to Target FOUR times a month, not 12 times.
- Ditto for the grocery store. Joanne had 21 separate charges at grocery stores. She shops at different grocers, which indicates she goes where the best prices are, but why in the heck is she buying groceries 21 times a month? Make a grocery run once a week, even if requires a little meal planning. It’s just too tempting to put other foods into your cart, even if you’re just there for a gallon of milk.
- Eat out less. There were 21 charges for restaurants and fast food (not including coffee shops). Pack a lunch or even bring a microwaveable lunch, which is still cheaper than eating out.
- Make her coffee at home instead of relying on Starbucks. (Joanne checked out at coffee shops nine times). Not only is making coffee at home a lot cheaper, but you won’t be tempted by the tasty muffins and sandwiches they sell.
- Refuse to pay for parking. To be fair, only one parking charge showed up, but it’s still an area of savings Joanne could tap into.
- Buy discounted gift cards at PlasticJungle.com
for the stores she shops most frequently at, including Target and CVS. Right now, gift cards for Target are selling for a 6.5% discount. CVS cards are selling for 7% off the card value.
- Skip the carwash. I know the culture in some cities is very car-focused, but why not shower your car at home? Or pay a kid a few bucks to do it?
- Pay off her bill in full. Joanne’s bill includes $44.14 in interest charges (at 13.24% interest). From her bill, I can tell that she has paid off the bulk of a past bill, so perhaps she slipped up and forgot the due date (in which case I’d call and ask for a refund on those interest charges), or paid slightly less than what was due (which often means you get charged interest on the entire amount charged). I’m relieved that Joanne pays more than the minimum, which can lead to a 68% markup!
What spending advice would you give Joanne?
As promised, here’s how to get FREE feedback on cutting your credit card bill.
1. Grab a recent credit card bill or print it out online. With a black sharpie, cross out all sensitive information, including your name, address, credit card number, and anything else you don’t want to share. All I need to see is the charges. Scan your bill and email it to julia at bargainbabe dot com. You can even create a separate email address to email me your scanned credit card bill so I will have no idea who it is coming from!
2. Or snail mail it to me:
PO BOX 103
Newport, RI 02840
Whether you are deep in credit card debt, or just want another set of eyes to find ways to trim your expenses, I can help. I’m an expert in everyday savings advice and having been helping readers save thousands for more than six years. With my advice, one reader bought her home in cash!
DIsclosure: I am not a CPA and have no formal training in saving money. I use common sense and frugal skills learned over a lifetime to save 26% of my income each year.
Welcome to Bargain Babe! I’m Mara, and I’m so glad you’re here. I am an obsessive bargain hunter and penny pincher, and I am determined to live a full life without EVER paying full price.
This is a great idea, but I actually love using my credit card but that’s because it’s a cash back one and I pay it off at the end of each month so I’m actually paid to shop! I’ve had it for 4 years now and I won’t spend anything on it that I can’t afford to pay out for straight away. However I prefer a credit card because a) a get cash back – last year I earnt $200 for just spending what I normally spend and b) I like the fact that my purchases are full insured on a credit card. All the best with saving people money on their credit card 🙂
@Mark Cash Sounds like you are a very savvy spender and saver! Way to go, paying off your credit card balance every month. To be clear, Joanne was able to pay off her balance, but she was still overspending. Do you ever overspend?
I also earn a 1% cash back reward on my card, and I agree, it’s nice to get paid to buy my groceries, gasoline, etc.
Any advice for Joanne, who does not seem to have quite the degree of restraint that you do?
@BB ~ There are some credit cards, e.g., Visa and M/C, that offer 5% off a category or categories for each quarter of the year. For example, right now our M/C is offering 5% off any purchases at drugstores, and Visa is offering 5% off gasoline. Our Costco AmEx card always rewards 4% for gas and 2% for restaurants. On all 3 cards, everything else is 1%. It sounds as though your card pays a flat 1% reward, BB. We use the card that earns the biggest rewards for our particular purchases. It’s less complicated than it sounds. And like Mark Cash (real name? :-)),we pay it off at the end of each month.
@Diane Yes, my main credit card earns a flat 1% back on all purchases. I know it’s not the top discount, but I don’t think I’d be diligent enough to check every quarter which discounts were what. And even if the discount for say, groceries, goes down, I still have to buy food. So I’m not sure how I’d adapt my spending habits to any benefit. I suppose I should look into it and estimate how much I could save with a higher cash back rebate on groceries and compare it with 1% back on all purchases.
For your AmEx that earns you 4% for gas and 2% for restaurants, is there an annual fee? I’ve heard of many promotions where the annual fee is waived the first year, but not after that.
@BB ~ First, what did you do with the real Bargain Babe? She would know that shopping wisely entails some diligence and discipline. But good news! Very little diligence is required here. Both V and M/C notify you when you can sign up for the next quarter (takes $econd$) and what the “5%-ers” are. Then I jot these down on a little sticky (1.5″?) and attach it to my wallet interior for quick reference as needed over the next 3 months. I carry two cards with me; the third I keep at home and use basically for the few online expenditures I make, e.g., paying a utility or phone bill. Also, occasionally V and M/C have the same 5% deal for the same quarter.
As for the AmEx card, the annual fee is that for Costco. I don’t want to think about the years we belonged to Costco and didn’t know that we could get an AmEx card for the cost of our membership. Because it’s just the two of us, we are not gold card members (if that’s the designation). For each of the past two years, from purchasing what we would have anyway, we have earned nearly $200. Costco’s gasoline prices are significantly lower than other stations here in the San Fernando Valley; then, calculate an additional 4% off and . . . win, win, win.
@Diane I’m just not convinced that swapping cards and playing this game with Visa and Mastercard where you “sign up” for 5% off discounts is saving me anymore money than getting a lower percentage cash back on ALL my purchases. As I said, I’ll have to crunch some numbers…this will be a good future post topic!
What do you mean when you say you have to “sign up for the next quarter”? Does V and MC email you what the % back for each category is for the upcoming quarter and you have to pick and choose? I don’t get it. Keeping a sticky in my wallet is not practical – Lucy is always getting ahold of my wallet and de-organizing it, but maybe I could write a digital note on my phone.
Your AmEx card is free with your annual Costco membership, correct? I think that is what you are trying to tell me, and that rings a faint bell from when I wrote about the cost of shopping at Costco a few years back.
@BB ~ Re signing up for the next quarter: Yes, you can be reminded via e-mail that it’s time to sign up for the next quarter. Also, at least one of those two cards also has a link when you open its site to pay your statement (or whatever it is you’re doing there). No, the category/ies are pre-selected. All you do is confirm you want to be included for the next quarter. There’s really nothing to it. The digital reminder note on your phone sounds like a good idea. (My stickie goes right next to my credit cards for an easy reminder. ) Maybe Lucy’s getting into your wallet is a sign that she couldl be a future good bargainer and is getting early practice. 🙂
Yes, the AmEx card is free with our annual membership. We didn’t know about it for too long! What freedom, also, in not writing checks at the register. That card is magical!
@Diane I’m going to crunch the numbers. Just this morning Hubs and I were looking at our credit card bill (to see if we’d stayed below the limit we set) and he looked at a spending analysis from 2012 and saw we spent $4,000 on gas last year!!! That is so high it can’t be right – that’s $333 per month on gas! Sigh. I have to take a deeper look at it. But it got me very curious about a 5% back gas credit card, even if it was only 5% back on gas for one quarter.
I suppose that’s a crucial piece of info I need to know. Let’s use your card as an example. In 2012, how many quarters did V or MC offer you 5% back on gas? One? Two?
@BB ~ You sighed about the amount you spent on gasoline last year. On your behalf, I gasped.
Sorry that I can’t help you with your question on how many quarters V or MC offered the 5% back. I don’t keep track of the “whens” of the categories. An alternate possibility, if you have a Costco near you, is to get one of its AmEx business credit cards (“Hubs” can be an associate and have his own card) and enjoy a constant percent off on gasoline. As I mentioned, our card is 4%. Other Costco AmEx cards might be different.
@Diane I checked our statements and the $4,000 figure is somewhat accurate, unless I’m forgetting a major auto repair charge we had. That’s a lot of money on gas! Maybe it IS time to upgrade to higher mpg cars.
We don’t have a Costco near us, so that’s not an option.
I’m crunching the numbers on a 5% gas card versus a 1% cash back on everything card. Hope to have it ready for Monday!