Credit cards. To some people, those words mind sound like a slippery slope into financial ruin and crushing debt. To me, though, they are just another part of my everyday money management.
In my last post, I mentioned that, while I don’t have any debt, I do use credit cards for most of my expenses. Because of some key habits that I’ve developed around my credit card use, I’m able to take advantage of all the benefits of credit cards without slipping into any dangerous habits that could lead to paying interest or getting behind on bills. There are three main things that I do to maximize my credit card benefits:
- Track all credit card purchases in my YNAB budget. Every single time I swipe my card, I log the expense in YNAB. If I don’t have money left in the budget, then I don’t buy anything, no matter how I pay for it. To me, a charge on my credit card is just like spending money any other way, since I track it in my budget.
- Pay off all credit card balances every single month. This is probably the most-often repeated piece of advice about credit cards, but it is important! At the end of every month when I reconcile my budget in YNAB, I pay off my credit cards in full, so I’ve never paid a cent of interest. I don’t have to worry about having the money in my checking account to pay off the cards, because it’s already accounted for in YNAB.
- Use high-reward credit cards. I maximize my credit card benefits by choosing to use only cards that have high reward values. My main card is the Citi Double Cash card, which gives 2% cashback on all purchases. However, I also have a few travel rewards cards (which I got for their signup bonuses) and an Amazon card, which gets 5% cashback on Amazon.com purchases.
By consistently practicing these habits, I’m able to take advantage of all the perks of credit cards while staying out of debt and avoiding financial stress.
Do you have credit cards? What steps do you take to make sure you’re using them responsibly?