One way to get control of your spending is “don’t swipe the small stuff” — or use cash for purchases of less than $20. (Jin Lee/BLOOMBERG)
Columnist

I’m a believer in creating your own financial rules of thumb.

It’s a practice I learned from my grandmother Big Mama. As a general rule of thumb, she didn’t use a credit card for anything other than major purchases. My grandmother used her Montgomery Ward credit card to buy an oven when it needed replacing and a washing machine when it broke. She wouldn’t get the matching dryer. “That’s why God invented sunlight,” she said.

But even on her tiny nursing-assistant salary, Big Mama accelerated payments to get rid of the debt as soon as she could, because her second rule of thumb was “hate debt.”

A study conducted by the Urban Institute, in partnership with the D2D Fund, used the theory of creating rules of thumb to see if it would change the behavior of some credit card users.

The target group was people who carried debt on their credit cards from month to month. Nationally, 43.6 percent of credit card holders carry a balance, according to the American Bankers Association.

The Urban Institute and D2D partnered with the Arizona Federal Credit Union in Phoenix to find subjects for the study, which was funded by the Consumer Financial Protection Bureau. The people they studied were mostly homeowners in their 40s and 50s.

The credit card users were given two rules of thumb:

● ●“Don’t swipe the small stuff.” Use cash for purchases less than $20.

●“Credit keeps charging.” Using credit can add about 20 percent to your total.

The rules were sent to almost 14,000 card users. There was a control group that didn’t get the rules. Others randomly got information about the rules through email, online Web banners at log-in and on a mailed calendar magnet.

The change in behavior wasn’t astounding, but it was encouraging. The “don’t swipe the small stuff” rule helped decrease credit card balances by 2 percent, compared with the control group.

“For some subgroups, this effect was even more pronounced,” the report said. “For example, participants under 40 exposed to either rule saw a 5 percent lower credit card balance.”

The study also found that the “credit keeps charging” rule resulted in fewer credit inquiries.

“Financial education relying on rules of thumb may be effective at improving financial outcomes because they are easy to understand and easier to follow and stick with than complex financial calculations,” researchers said.

There is hope that this study could lead to more research to test the impact of rules of thumb.

My grandmother taught me that creating rules for your finances could help in your money management. One rule in particular has saved me a lot of money: Pay your bills early.

One of the best ways to improve your credit history, and your credit score, is to pay your bills on time. But Big Mama believed that if you were on time, you were late. She left for her job, appointments and church long before she was due to arrive. She was always concerned that something might delay her, so it was best to build in extra time so that you would not be late. The same rule can be true for paying bills. Big Mama always paid her bills early.

Pay late, and you incur a fee. But some companies charge a “convenience fee” if you pay your bill over the telephone or online, often to avoid getting a late fee.

If you use your credit card to pay a bill because you don’t have time to mail a check or haven’t set up electronic bill paying, you could be charged a convenience fee. For instance, if I want to pay my children’s college tuition using my credit card, I would have to pay a processing fee of 2 percent of the payment amount at one school and 2.75 percent at the other.

So you better believe that I make sure I arrange for their 529 college savings money to be withdrawn in plenty of time to be deposited in my bank account so that I can pay by electronic check — for which there is no fee.

Among the colleges and universities that accept credit cards, 57 percent charge fees for card payments, according to CreditCards.com. The average credit card payment convenience fee is 2.62 percent.

Thanks to Big Mama, I’ve got a lot of rules to govern how I save and spend. But I want to hear from you. What financial rules of thumb have worked for you? Send your rules to colorofmoney@washpost.com. In the subject line, put “Rules of Thumb.”

Write Singletary at The Washington Post, 1301 K St. NW, Washington, D.C. 20071 or michelle.singletary@washpost.com. To read more, go to wapo.st/michelle-singletary.