How I use my credit card as a budgeting tool
Written by Cait Flanders

Monday, January 22nd, 2018

Four years ago, I was maxed out with over $28,000 of debt. At one point, before I consolidated my debt into one loan, almost half of what I owed was credit card debt. When you're maxed out, you literally can't use your credit cards anymore. But even after I made my last payment and was debt-free, I was still scared to use my credit cards for anything more than a few small expenses, because I was worried I'd go back to my "spendy" ways and rack them up all over again.

Fast forward to today and I now use my credit cards to pay for absolutely everything. In fact, I would consider them one of the most important tools in my budgeting system. Here's how I use them:

1. I use my credit cards as budget trackers 

Once a week, I log into my credit card accounts, review all my expenses then plug them into my monthly budget. From there, I can see how much money I've spent in all categories and how much money I have left over in my budget, so I know if I'm going to stay on track or go over. The added bonus is that, because I don't use cash, I never run the risk of forgetting how much money I've spent. 

2. I use my credit cards to remove multiple bill payment due dates from my calendar.

One of the biggest stressors in my financial life used to be how many different bill payment due dates I had. My cell phone has to be paid once a month, hydro every two months, etc. Today, most of my bills are set up to be automatically paid by one of my credit cards, which means the only bill payment due dates I have to track are for my two cards. (Note: Most insurance policies can't be billed to your card monthly, so I still have to pencil those in.)

3. I use different credit cards to maximize the rewards.

The reason I finally decided to try using my credit cards to pay for all my everyday purchases was that I realized how much money I could potentially earn through various rewards programs — and I try to max those out. So I use one credit card to pay for gas, groceries and bill payments, because I earn the most cash back on those spending categories with it. Then I use a second card to pay for everything else, which helps me earn free flights. In the past 12 months, I've earned about $900 worth of rewards between the two cards. That's free money, just for doing my regular spending!

Of course, it wouldn't be worth using these rewards credit cards if I were racking up balances and paying interest on them each month. Because I track my spending, I'm able to make sure I don't go over budget — and the feeling of once being maxed out helps stop me from ever swiping for things I know I can't afford. I haven't paid interest on a credit card in over two years, and I'm earning more "free money" than ever before. That's why credit cards are one of the most important tools in my budgeting system.

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