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A
credit card
can be a great tool for managing your monthly
living expenses. Using your credit card to charge
all of your bills and purchases can make life
easier. When used wisely, this approach can save
time and help you maximize your credit card’s
rewards program.
Establish a budget
The first step to successfully implementing this
strategy is to set up a monthly budget. When you
set limits for yourself, you can be sure not to
charge more on your card than you can pay off at
the end of each month. Start with your monthly
bills (utilities, mortgage, car payments, etc),
add your variable monthly costs (food, gas,
entertainment, etc), and compare it to your total
monthly income to establish your limit in each
area. Most
credit cards
have online access that will allow you to keep an
eye on your purchases.
Payments
If possible, set up your bills to automatically
charge your credit card each month. Keep in mind
that it may not be possible to charge every
monthly expense to your card, but you can still
take advantage of this approach with the remaining
expenses. When choosing a credit card, make sure
to factor in whether it is accepted by the stores
in which you usually shop.
Ease the burden of record keeping
Making all your purchases on your credit card can
make record keeping easier. Instead of having
many transactions to record in your checkbook
register throughout the month, you have only one:
the check you write to pay off your credit card
balance. This makes it much simpler to balance
your checkbook.
Your bank statement is a record of all the
transactions that have occurred in your account
during a month. By paying for most expenses with
your credit card, you are reducing the number of
transactions that appear on this statement. The
reduced number of transactions makes it easy to
compare with your checkbook register. Not only
can this save a lot of time, but it significantly
reduces the
margin
of error in your records by making it easier to
spot mistakes.
Maximize credit card
rewards programs
Putting all your expenses on a credit card that
offers rewards allows you to get the maximum
benefits from these programs. The more you charge
to the card, the more rewards you earn. For
example, let’s say you use a card featuring a
“cash back” reward that pays 1% for each qualified
purchase. If your budget for monthly expenditures
is $2,000.00 and you use your
rewards card
to pay for all of them, you can earn $20 per
month. That totals an extra $240 each year, just
for smart use of your credit card. Don’t forget
the other rewards programs, like travel rewards or
store credit. When choosing a card with which to
try this approach, factor in which rewards program
will be most advantageous to you and your family.
Some things to keep in mind
Pay attention to fees,
grace periods
and
interest rates
when choosing a card. Make sure that the benefits
of putting everything on your card outweigh these
costs or other inconveniences. In addition,
staying within your budgetary limitations is key
to the success of this approach. You must pay off
your credit card each month in order for any of
the above advantages to be worthwhile.
Paying your monthly expenditures with your credit
card can make things more simple and can help you
leverage your credit card rewards program. Choose
your card wisely by comparing interest rates,
fees, and rewards programs. Establish a budget,
set up your payments, stay within your limits, and
start seeing the benefits.
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