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6 Ways to Set Up and Stick to a Budget Using Your Credit Card

You might have heard about budgeting with your credit card, but what exactly does it mean? For Toronto resident Elizabeth Keay, credit card budgeting is about tracking expenses and saving money on day-to-day spending while juggling daycare and mortgage costs in an expensive city. Keay chose cards with incentives that were valuable to her family, like food and travel, and saves on groceries every month by redeeming points. “We use these credit cards to automatically pay as many bills and recurring expenses as possible to generate the most points,” she says. “That way, we can manage unexpected things that come up in life — like when our dishwasher broke — without worrying about having the cash on hand.” 


Done responsibly, swiping your credit card can give you financial wiggle room. Ready to incorporate your card into your budget? Try out these seven strategies. 

July 24, 2020 in Learn

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1. Set a budget limit on your credit cards.

Unlike bank accounts, which often offer overdraft you can set a limit on your credit card to keep you on the straight and narrow. For easy math, say you’ve budgeted $1,000 a month for food, transportation and clothing. Keeping your credit card limit at $1,000 is a firm way to enforce that budget. You can even challenge yourself to whittle down non-fixed expenses, so you don’t reach the limit: for instance, maybe you cook dinner more often rather than getting a restaurant meal or set a monthly maximum for new outfits. If you choose to do this, keep an eye on your transactions and plan for special bills, like annual tax payments or quarterly charges for utilities or other services. American Express® Cardmembers have access to many account management tools to help keep track of payments.

2. Budget better with the right credit cards for you.

Fees, interest rates and benefits vary, so it’s important to choose the right credit cards that will work the hardest for you and your budget. Be on the lookout for special offers that will help your bottom line. Close any accounts that aren’t giving you what you need and sign up for yearly-fee cards that offer the right benefits for your lifestyle.

3. Work credit card rewards into your budget.

It’s nice to be rewarded. Pick cards that offer cash-back incentives or rewards that you want or need. Redeeming what you’ve earned will loosen up your finances and help you hit your savings goals, pay down debt or build an emergency fund. Check your card’s redemption site regularly to see what you could qualify for. To maximize your points earnings, use your card to pay for frequent purchases, like groceries, and larger buys, like new furniture. If you’re being responsible, tracking your spending and paying off your balances promptly, giving your card a workout can be really helpful.

4. Use interest grace period for purchases to free up cash flow.

Between the last day of your credit card billing cycle and the payment due date, there’s a window — typically 21 to 25 days — where, if you pay off your balance, new purchases won’t be charged interest. During this interest-free grace period, using your credit card for everyday purchases can leave more cash in your bank account for unexpected costs (like a car repair or broken furnace). Be careful here, though. Make sure you’re diligent about paying off your charges at the end of the month.


5. Get a supplementary credit card.

When two incomes become one, spending lines can get blurred if each person maintains a separate credit card account. Adding a supplementary card to your account means your partner can use their own card for purchases under the same account. They also get access to many of the same benefits you enjoy. Sharing a single account, both partners will know exactly where the total household budget stands. This trick comes in handy when it comes to tracking your spending. If your budget allows, you may want to have multiple cards and assign certain ones to specific spending categories, like groceries or bills.

6. Pay off your credit card balance regularly.

Last, but certainly not least: don’t just pay the minimum payment every time. All of these tips are great, but the only way to truly make your budget stick is to frequently pay down your balance and avoid paying interest. Doing so could also help you build your credit score, so it’s a win-win.


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