If you’re trying to stay on a budget and having a tough time keeping track of where your money keeps disappearing to, here’s an idea: use your credit card more often.
Yes, that’s right. Using a credit card for most of your purchases is actually an easy way to stick to a budget and see exactly where your funds are going. Here are a few ways to use your credit card to take control of your finances—and some guidelines for doing so.
Pay your credit card bills in full every month. The first thing to know if you’re going to use this method is that you must pay all your credit card charges in full by the due date every month. Yes, every month. Without fail. If you don’t, then using a credit card is going to result in the opposite effect from what you’re going for: you’ll be in worse financial shape due to interest fees and possible late charges. Your credit score could suffer as well. So remember, pay those balances off completely each month. Set up automatic payments to make sure this happens on time.
Charge as many of your purchases as possible. Now that you’re paying your cards off each month, you can go ahead and pull out your plastic at every opportunity. The more you use your credit card, the easier it will be to keep track of your spending. If you use cash, you may not have any record of where you spent it. With the credit card method, you don’t have to collect receipts, unless you need them for tax purposes or possible returns.
Log into your account online and take advantage of the tools available. Make sure you’ve chosen a credit card that comes with perks like spending trackers, reporting capabilities, and a user-friendly online dashboard. Many cards will break down your spending for you, showing it to you in a colorful pie chart. It’s easy to see what you spend in grocery stores, on gas, on travel, and at restaurants. You can also set spending limits with some cards, so you’re alerted when you’re reaching your spending cap in a certain category and you know to pull back.
Connect your card to a mobile money management app. Apps like Mint and other finance apps let you connect your credit card so the spending is automatically tracked and sorted into categories. A wealth of data will be available, literally at your fingertips, when you use these mobile apps in combination with your credit cards. Knowledge is power, so make sure you have as much as possible.
Apply for the right credit cards—and use them to collect rewards. When you’re using your credit cards for most of your spending, you’ll want to make sure you’re getting the most from them. That means finding great rewards credit cards that let you rack up frequent flyer miles, thank you points, and cash back. Make sure you have a few different cards in your wallet, so you can use the ones that give you the most rewards wherever you are. Maximize your credit card rewards by being mindful about which cards you use and when.