Short Answer: Use cash whenever possible

It’s no secret that commercial banks make millions each year from customer fees. Often times, these fees can come at inopportune times, like, say, when you overdraft your account by buying a $5 coffee. So now, you’re not only broke, but you also owe an extra $37 for that overdraft! Or, you’re paying 24% interest on the supposed “great deal” you scored by putting something on credit.  Here are some tips and tricks to help you keep your hard-earned money.

1. Keep a separate checking account that serves as overdraft protection. Choose a checking account that waives fees for monthly deposits. Then, set up a $10, $20, or $50 automatic transfer into that account each month. You can then up overdraft protection to your main account from your “backup” account.
2.  Use cash or a pre-paid debit card. Other than bills or planned budgetary things like groceries or gas, carry cash! You’ll always know exactly how much you have left. Studies by the Consumer Financial Protection Bureau found that people are more likely to overdraft a checking account with a purchase below $20. The same study also found that study participants spent less money overall when they used cash for all purchases less than $20.
3. If you can’t pay it in cash, don’t buy it. Even if you intend to charge it, if you cannot pay it off in cash right then and there, bypass the credit card altogether.
4. Keep one or two credit cards only, use them periodically at times that you can pay them off right away. This keeps them active and your credit score high while eliminating any chance of paying interest. Retailers spend millions on advertising to condition us into thinking that we can “buy it now, pay it later” on things we don’t need. It’s best to keep credit cards on hand for surprise purchases like a car repair or vet bill.

Finn’s Fact:  The Consumer Financial Protection Bureau found that people were willing to spend twice as much on an item they paid for with a credit card vs cash.