How to Budget with a Credit Card: 4 Tips for Setting and Maintaining Your Budget

Setting a budget with a credit card might sound counterintuitive, but credit cards can make great tools for financial planning. There are multiple reasons to try budgeting with your card, including all the unique features that credit card owners can take advantage of. Using your credit card to track your spending and expenses is a great way to maintain or improve your credit score and accrue rewards over time. Keep reading to learn how to keep track of your budget with a credit card.     

1. Keep a Record of Your Spending

Whatever your financial goals, keeping track of your expenses is a great place to start. Many credit cards already keep track of your spending by sorting your past expenses into different categories, such as shopping, travel, bills, and more. Add up each category to get an idea of how much you spend in a month. You can also look at your credit report—most credit cardholders receive one annually—for an overview of your spending habits. Some cards also offer customizable reports that break down your spending over a designated period.

If you use other forms of payment throughout the month, such as cash or money transfers, you’ll probably need to keep a record of all the purchases you made without your card. Spending apps, like Mint, are a great way to keep a running log of your purchases. You can also do it the old-fashioned way by saving your receipts or using a pen and paper.

2. Set a Credit Card Spending Limit

Setting a self-imposed credit card spending limit can help you avoid overspending. After calculating your monthly credit card expenses, decide on a number or price range to stay under every month. Periodically check to see how much you’ve spent on your credit card via your company’s app or website to make sure you’re within your budget. You can also set limits for different categories, such as shopping, dining out, and travel.   

Make sure your spending doesn’t regularly approach your credit limit, as this can affect your credit score over time. Experts recommend calculating 30% of your credit limit and using that figure as your personal spending limit to avoid harming your credit score. Your credit card utilization rate—the sum of all your balances divided by the total of your credit card’s limits—is affected by your credit card balance and plays an important role in calculating your credit score.  

3. Create a Billing Schedule That Works for You

Keeping track of various bills throughout the month can really throw a wrench in your budgeting plans. If possible, change the date of your credit card billing cycle to align with your payday. This can help you avoid missing a payment and make paying your bills a no-brainer. If you get paid bi-monthly or once a week, inquire about splitting large bills into two payments to align with your pay periods.

4. Utilize Credit Card Rewards

Credit card owners know that accruing rewards is the best part of using a card. You can decide which purchases to put on credit depending on the incentives that come with them. For example, some credit cards offer cashback for certain purchases such as groceries, dining, or entertainment. Other credit cards give you rewards when you use them to purchase airline or concert tickets. You can save on the purchases by applying the cashback to your credit card statement.

If you’re looking for a little extra flexibility in your credit card budget, don’t count your credit card rewards as a part of your income. Save your rewards for expensive items, emergencies, or unprecedented events. If you’re juggling a few different credit cards, make large purchases using the card with the best cash-back system. Before you open a new card, make sure that the rewards outweigh any annual maintenance fees.

Now that you’ve considered these tips and tricks for budgeting with a credit card, you’re ready to use your card to your advantage. If you’re looking for more advice and financial literacy tips, look no further than The General’s blog. For affordable car insurance coverage, get an insurance quote in under two minutes. We have a range of different policies for every driver, including drivers in the high-risk category and drivers with imperfect credit scores.  

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