question about using cc for rewards

[kacaju]

I know many people say they use their cc to pay for everything and then they pay it off each month.
How do you do so? Do you limit your spending, do you keep track of how much you spend so by the end of the month you have enough money to pay for it??

We were in debt, I do not want to go back...I use cash or checks for everything now. I wouldn't mind getting a card for rewards, but I am so scared I will run up a balance and not be able to pay it off.

For example, Costco drives me crazy... they have people whose job is to stand by the lines and scan your card to see how much you've spent over the year try to get you to use their Amex card (with rewards).
I don't want their card, I like the fact that I have to pay in cash (or check) it really does help limit my purchases since I know I only have x amount of money to spend. If I had the card I am afraid I would end up spending more on it and then I wouldn't be able to pay it off by the end of the month.
So, do you have a method of using a cc and being able to pay it off each month?

 

[minnie1928]

I use cards for rewards. I simply budget $x each month for things like groceries, gas, etc. Then when the bill comes, I take the money that I've budgeted and use that to pay off the card. If you want, instead of using a check you could use the card and then pay off the card online when you get home.

It's a mental attitude thing really, you need to view the credit card more like a debit card...don't spend it if it's not in your checking account. If you can keep it in this mindset, the rewards are great. If it's too much temptation, then skip the rewards and keep your sanity!

 

[driftwood]

I write down and deduct every charge I make in my checkbook, as if I was using a check. Instead of a check number, I put an A for Amex, D for Disney Visa, etc. Then when I go to pay it online, usually weekly, I reconciliate the totals to match, then pay. Or like when I didn't do it online, I'd match the entries to the mailed bill and pay right away. The charges have already been covered by deducting them individually in the checkbook. Just keep the totals to reconcile them with your bank statement. I've done it this way for 30+ yrs and haven't made many mistakes (and those mistakes are usually in my favor because I have forgotten and deducted twice the amount).

 

[clutter]

I record all my purchases in my checking account. At the beginning of the month, I deposit my budgeted amount. By deducting my charges against it, I don't go over budget. It also keeps my avg daily balance up in my checking account. The key then is to monitor your checking account by your register and NOT your ATM balance!!!

 

[aka-mad4themouse]

Certain bills that are consistent from month to month go on the CC if they can be auto-billed. That includes the cell phones, car insurance, cable & internet, heating oil. I would be writing a check every month for those services anyway and they don't vary much from month to month.

Groceries and gasoline could fluctuate if I weren't careful so I send a payment every week to cover those charges. I just keep the receipts in my wallet and add them up weekly. My checking account has an online bill paying feature with no charges. So I go into the checking account and schedule those payments every Tuesday.

I do the same with those once-in-a-while purchases like the wedding shower gift I bought this week or the new lamp for our DLP TV that I got on eBay the week before. That way there are no big surprises when the statement comes in the mail.

It does take a lot of discipline and if you're inclined to play two ends against the middle with your finances it's best to start with just a couple of recurring bills that are always the same. Then gradually build from there.

 

[pjlla]

I pay my CC bills online. I usually only use my Southwest Card if it is going to be a $100 or more (groceries, etc). When I get home I pay it THAT DAY! We used it to be buy a Museum of Science membership and an Aquarium membership during school vacation (we were buying it anyhow), as well as all of our other "fun" things during vacation week. I paid it off the following Monday.

Another good way to keep yourself out of big trouble with credit cards it to keep a VERY LOW line of credit. I have $5000 on our Chase Southwest card and it would be much lower, if they would allow it.... but in order to earn airmiles it has to be at least a $5000 limit. Maybe other "reward" cards would allow lower limits.

It does take a GREAT DEAL of discipline... if you don't have the discipline, maybe you would be better off forgoing the "rewards" and keeping yourself out of potential trouble.....................P

 

[ecuagoddess]

I write down and deduct every charge I make in my checkbook, as if I was using a check. Instead of a check number, I put an A for Amex, D for Disney Visa, etc.

That's EXACTLY how I track expenses in my checkbook. I always know how much money I have in checking. When the bill comes, I write the check without any worries because I've already "spent" the money and accounted for it. I love doing it this way- and it gets me plenty of miles!

 

[Darcy03231]

I can make 4 payments a month on-line. I charge everything I can for a week and at the end of the week I pay it off. Same for the next week, and the next, etc. If there are more than 4 weeks in a month, I'll transfer what I spent on the cc from checking to savings and then pay both weeks the following week.

I know people who do it monthly by transferring money from their checking to their savings after every purchase and then pay the cc of from savings at the end of the month. I just find weekly works best for me.

 

[mrsklamc]

I'm just a tightwad. Other than vacations I HATE to spend money so I typically don't have a difficult time keeping my budget categories in line.

My gut reaction is that if you think the credit line will cause temptation, I would avoid it, but I think the plan outlined above about starting small with a regular bill is a good idea if you are determined.

 

[nicknamy1996]

We've been doing it for years too (including whatever bills we can w/o an added cost.) Not one cent in interest and LOTS of Disney Dollars.

We have never kept a register... but I like the idea. I just check it online every day and see what my balance is up to. Then if it's getting too high for where we are in the month I try to keep my wife from over spending.

One big plus is that at first you will get a 'free month' too.

For an example... Lets say you spend $1000/month.

With checks....
January purchase is paid in January. ($1000 in & $1000 out) Extra money = $0

With CC...

February purchases go on CC. (checking account grows to $1000... and so does your debt) But the bill isn't due for another month. So by that time you have 2k in the bank, and have to pay the 1k.



After that you'll get in to a rolling cycle of $1000 in and $1000 out every month but you have an extra month when you first start up and can manage to save a few bucks... or a least have a comfortable month.

The only downside it if you ever decide you don't want to do it anymore you lose that month. I don't plan to ever stop the way we are doing it, but I've thought about how it would play out. That 'lost' month would catch up with you. You'd be using you bank account to pay the bills and then at the end of the month you'd need that same money to pay off the CC from the previous month.

WHEW... I got long winded there!


The other thing to remember is you will have to be disciplined! Studies show that you will spend more when paying with a credit card. When you've done it both ways it's really pretty easy to do, and even notice you're doing it. So you just need to be good.

 

[LastLookAtTheCastle]

I check the online account almost daily, and record what's posted to the account. I then figure out what I can pay off of that balance that week - we make a payment every Friday, and then clear the balance off the day before our statement posts.

 

[JeMarie6]

I agree its easy to over spend on a credit card, but paying it off every week helps me realize when I've gone a little overboard. You have to be self disciplined to use this stragey as one missed payment or one big balance even carried over for a couple of months can wipe out your savings.

Not every one can juggle a lot of cards, but I often use 4 or 5 different cards each month depending on what I'm buying. For groceries, I've got a 5% bonus on a chase mastercard, a 5% cash back gas card from discover, and different 5% discover card for whatever their current 5% bonus cash back is for (got $80 back for our airfare/hotel reservation!) and chase freedom Visa for 3% cashback on fast food and other items. I had to put little labels on each one so I know which one to use at the which store, but for me the extra trouble is totally worth the rewards. it takes longer to get a reward on each card that way, but I like to save them up usually until Christmas and then usually get a ton of gift cards. Plus of course, I got a bonus (usually $50 or more) when I signed up for each new card. But again, not for everyone.

 

[CherylA]

I use YNAB (you need a budget) it's budgeting software and money management software together When I spend $$ on my cc it comes out of my budget the same as if I spent it out of my checking acount. I just pay the balance of the card when I think of it. Usually 4-5 times a month. Its working out really well for us.

The YNAB system also has you save an entire month of expenses so that the money you spend this month is actually money you made last month. What that does is allows you to adjust your spending if you make a little less one month you can find places to cut back so that you spend a little less that next month.

Someone else on the boards here recommended it. It's taken me 9 months to really get the full benefit of it but I'm loving it now.

 

[kacaju]

Thanks for all the explainations!! My head is spinning. This is something I think I will wait about 10 years to start. When my youngest will be 19 and (hopefully) out of the house. I think at that time I will have the time to work on this!! LOL!!!

It does sound pretty easy, but not something worth my time right now.

 

[Karenj2]

I use YNAB (you need a budget) it's budgeting software and money management software together When I spend $$ on my cc it comes out of my budget the same as if I spent it out of my checking acount. I just pay the balance of the card when I think of it. Usually 4-5 times a month. Its working out really well for us.

The YNAB system also has you save an entire month of expenses so that the money you spend this month is actually money you made last month. What that does is allows you to adjust your spending if you make a little less one month you can find places to cut back so that you spend a little less that next month.

Someone else on the boards here recommended it. It's taken me 9 months to really get the full benefit of it but I'm loving it now.

I use YNAB too! Now, sometimes I play "whack a mole" between my budgeted categories but other times I let myself get "punished" for overspending (the program takes that amount out of next month's budget).

The other good thing about the bolded above is that once you get the "buffer" and are living on LAST month's salary, you automatically have a buffer in case of severe overspending... Since budgeting this way, we've NEVER been concerned about paying a bill that would bounce.

DH and I have been using it for a year, and what's been great for us is that we've been able to adjust our spending habits so that we can put a set amount/month into our EF, plus other accounts like our Christmas account (so that in December I'll be able to spend $$ without feeling guilty come January!)

 

[CherylA]

I use YNAB too! Now, sometimes I play "whack a mole" between my budgeted categories but other times I let myself get "punished" for overspending (the program takes that amount out of next month's budget).

The other good thing about the bolded above is that once you get the "buffer" and are living on LAST month's salary, you automatically have a buffer in case of severe overspending... Since budgeting this way, we've NEVER been concerned about paying a bill that would bounce.

DH and I have been using it for a year, and what's been great for us is that we've been able to adjust our spending habits so that we can put a set amount/month into our EF, plus other accounts like our Christmas account (so that in December I'll be able to spend $$ without feeling guilty come January!)

Hee hee Karen you're the one who recomended it. I'm loving it. It's been perfect for me!

 

[OctMtnWoods]

I purchase on credit cards for rewards, then pay the credit card online from checking in a day or so when the charge hits OR I just pay it bi-weekly when DH gets paid. Its still like paying with cash. I'm just paying it a couple of days after I bought it.

 

[ashleyd725@hotmail.c]

I too was worried about using CC's after we had paid them all off, but then I was at my bank one day and the teller told me, "you know you have 100,000 points are your account right?". I didnt even know DH signed our bank cards up to their rewards pts, we get the same offers as any other CC with the Visa symbol, even disney park tickets, and we are just using our bank card. So that is always an option!

 

[lisajl]

I have the Costco Amex card. When we make a purchase using the AMEX, we automatically deduct it from our checking. When it comes due, the money is already gone to me.
We have been in CC debt too, and I will never go back there again.
We pay our CCs off every month, if we put something on them.
I don't pay our bills by credit card, but we may start due to the rewards we would get.
With our Chase credit card when we get to 200 points we get a check for $250.00. Not bad when you don't pay any interest.

Lisa

 

[NHWX]

I do something very much like this also! When it looks like my checking account is getting low, it's time to rethink things!

NHWX

I write down and deduct every charge I make in my checkbook, as if I was using a check. Instead of a check number, I put an A for Amex, D for Disney Visa, etc. Then when I go to pay it online, usually weekly, I reconciliate the totals to match, then pay. Or like when I didn't do it online, I'd match the entries to the mailed bill and pay right away. The charges have already been covered by deducting them individually in the checkbook. Just keep the totals to reconcile them with your bank statement. I've done it this way for 30+ yrs and haven't made many mistakes (and those mistakes are usually in my favor because I have forgotten and deducted twice the amount).