All your ever hear about credit cards is that they are dangerous and can lead to insurmountable debt! Unfortunately, for far too many people this statement is more often than not true. But if you are here at my personal finance blog reading this article than chances are you are looking for some tips to improve your finance situation. My first tip is to not overspend on your credits cards, do not rack up finance charges, do not send in your payments late, and in general do not misuse your credit! That being said, do use your credit card to your benefit, to budget better, and to maximize your rewards.
Credit cards can be great for racking up reward points and getting free money back, that is as long as you don’t carry a balance or pay interest on these charges. However, were you aware that credit cards are a powerful budgeting tool? Most people don’t realize that the big players like Amex and Discover offer free online tools that categorize your spending in an easily readable format. Each month I’ll go on the website and analyze which categories I’ve done the most spending; entertainment, grocery shopping, retail, gasoline, etc. This allows me to adjust my budget on an as-needed basis. Now that I’m married it’s become more difficult than ever to determine how much money is going out the door and to which types of expenses. For example, I didn’t think twice about my gasoline spend nearly doubling over the past month now that there are two drivers in the household. There was even a jump in utility spending as we consume more hot water and electricity as well. These may seem like no brainers, but speaking from experience the more often you use your credit card to pay for your routine expenses the more visible they become and the more easy they become to budget.