Digital wallets can be considered the future of brick-and-mortar payments. A digital wallet allows consumers to store all of their credit cards directly on their phone, securely, and makes them available for use at the point of transaction. Using this technology offers convenience and often the ability to save money, too.

Digital wallets give you the option to leave your cash and cards at home, but what’s the right (and wrong) way to use this virtual convenience? Consider these five tips for helping to ensure you’re being financially savvy when paying with your mobile device.

1. Use Your Mobile Credit Cards Wisely

While not all cards are currently accepted for use with a wallet like Apple Pay — and not all merchants are set up to accept digital wallets for payment — Laurence Cooke, mobile technology expert and founder and CEO of nanopay, doesn’t expect that to be the case for long. “Digital wallets will eventually store general purpose credit, debit and prepaid cards, as well as merchant-specific credit and gift cards. You will see broad acceptance over the new few years,” he says.

But, with that in mind, the adage “just because you can, doesn’t mean you should” has bearing when it comes to digital wallets. If some of your cards have excessively high interest rates — or if mobile credit access will tempt you to develop or continue a habit of overspending — consider leaving them out of your digital wallet altogether.

2. Choose Your Default Card Carefully

With smartphone ownership having reached 84 percent among U.S. adults in 2018, the pool of potential digital wallet users continues to grow. According to research from Mercator Advisory Group, “as users gain familiarity with mobile payments, they tend to use them more often and in more places.” Consumers also are attracted to digital wallets that offer enhanced rewards, in addition to convenience.

Yet, the adage “just because you can, doesn’t mean you should” has bearing when it comes to digital wallets. If some of your cards have excessively high interest rates — or if mobile credit access will tempt you to develop or continue a habit of overspending — leave them out of your digital wallet altogether.

3. Store Multiple Credit Cards to Maximize Rewards

Perhaps the greatest benefit of learning how to use a digital wallet is the ability to store all of your credit cards directly on your phone. Not only does this mean not carrying around a swollen wallet, but it also allows you to easily access the credit card that will, for example, earn you the most rewards on a given transaction.

Say you’re in the checkout line at the supermarket using your physical wallet, but can’t seem to find the card that earns extra cash back on groceries. Instead, you opt to use whatever physical card is readily available. This situation represents a missed opportunity to save money. If all of your cards were stored in a digital wallet, it might have been easier for you to find the card and earn the extra cash back.

4. Practice How to Navigate Your Digital Wallet’s Features

Some credit cards include the opportunity to earn additional rewards for purchases at specific times of the year. Others may offer money-saving discounts when you use the card to buy from certain merchants.

Digital wallets, typically offer you options for selecting among the cards in your digital wallet — whether that means changing the default card or removing a card — by going into your smartphone settings. To make the most of your card rewards and discount opportunities, practice how to select cards in your digital wallet before you’re standing at the point of sale. The more confident you feel about the features and navigation of your digital wallet, the less likely it is that you’ll feel too hurried to choose the card you want to use in a busy checkout line.

5. Don’t Abandon Your Good Financial Habits

Digital wallets change the way you pay, but they shouldn’t impact the financial habits you’ve already established that help you live within a budget. Although you’ll point your mobile device to pay instead of using a plastic card, the rest of the transaction remains familiar.

If the card accounts in your digital wallet are linked with a budgeting app, you’ll see the transactions posted there, too. Check in with your financial and credit card accounts frequently to ensure that you know what you’ve spent and to verify that purchase amounts are accurate.

In its review of budgeting and personal finance apps for 2019, NerdWallet recommends YNAB (You Need a Budget) as the “best budgeting app for hands-on users.” Because the app has the ability to sync across several platforms in real time, you — and anyone you may share a budget with — can maintain a real-time view of purchases, whether they’re made from online banking platforms, with a physical card, or from your shiny new digital wallet.

As you look for the best ways to manage your financial life, digital wallet technology is something worth checking out. Adding credit cards to your mobile wallet is easy, often requiring you simply to enter the card number, expiration date and CVV — not much more effort than it takes to present a physical card at the point of sale. You may find you gain a whole new world of convenience and security, all from the comfort of your phone.

Originally published May 10, 2016

Updated March 22, 2019

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