Budgeting with a credit card: 6 tips
Credit cards offer features—including account alerts, automatic payments and purchase tracking—that can make them ideal tools to help build and maintain a budget.
What you’ll learn:
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Digital statements and balances help make it easy to track spending and categorize expenses.
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Account alerts and automatic payments can help you monitor your balance and avoid missing payment dates.
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Rewards credit cards might offer cash back or miles on purchases.
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You can build credit with a credit card by making on-time payments and staying below your credit limit.
1. Keep track of credit card transactions
You can review your credit card statement to better understand where you’re using your card and how much you’re spending. And using your credit card issuer’s mobile app or signing in online gives you access almost anytime you want to review your transactions.
Some card issuers will group transactions under spending categories. For example, Capital One uses categories such as:
- Dining
- Grocery
- Merchandise
- Gas/automotive
- Phone/cable
2. Maximize credit card rewards
By using a credit card to pay for everyday expenses, you could earn rewards on things you’re already buying. For example, Capital One Savor cardholders earn unlimited 3% cash back at grocery stores, on dining, entertainment and popular streaming services, plus 1% cash back on all other purchases.
3. Avoid additional charges and fees
The Consumer Financial Protection Bureau recommends paying your credit card balance off each month to help avoid interest charges. Those charges could make it harder to stick to your budget. So could late payment fees.
4. Set up account alerts
Some credit card issuers let you set up account alerts to help keep track of your account activity. For example, Capital One cardholders can set up text messages and email alerts about:
- Purchases
- Statements
- Credit limits
- Payment dates
Eno, your Capital One assistant, also sends spending insights about duplicate charges, higher-than-usual tips and more.
5. Set up automatic payments
Setting up automatic payments could help you simplify recurring expenses and avoid late fees.
Capital One cardholders have access to AutoPay, which allows you to make automatic online payments on a recurring basis. You can make or schedule a one-time online payment as well. Plus, you have the option to adjust your payment due date to fit your budget.
6. Use your card responsibly
Making on-time payments every month and staying below your credit limit could help you build credit. Doing those things could also help you avoid late fees.
You can monitor your credit with CreditWise from Capital One. It’s free. And using CreditWise won’t impact your credit scores. You can also visit AnnualCreditReport.com for free copies of your credit reports.
Key takeaways: Budgeting with credit cards
Budgeting with a credit card can be part of your approach to managing money. It can include strategies like setting spending limits on your card, using automatic payments and maximizing your rewards.
If you like the idea of budgeting with a credit card, you can see if you’ll be approved for a card with 100% certainty before you accept. It’s quick, and it won’t hurt your credit scores.
