Credit cards and budgeting are rarely used in the same sentence. That's understandable, given the potential impacts to your finances when whipping out plastic for every purchase and racking up debt. No doubt this is a dangerous potential outcome for cardholders failing to keep tabs on their finances.
But credit cards do have the power to help cardholders beat their financial goals. Savvy credit card use can help to improve your credit score to secure better loan rates, plus everyday purchases earn cash back and can put some extra cash in your pocket.
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In the video segment below, Motley Fool analysts Nathan Hamilton and Michael Douglass talk more about credit cards and budgeting while also highlighting one strategy cardholders can use to keep their spending in check and pay bills on time.
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This video was recorded on March 29, 2017.
Nathan Hamilton: Here's a good example of how I work my budget to make sure that what I'm spending on credit actually matches with cash in the bank because I put everything on credit cards nowadays. The simple strategy that I've set up is essentially breaking my budget down for the 10th of the month, the 20th and the end of the month. All I do is I set an alert whenever I go over my certain allotted amount for that 10-day period. I get a notice and say, "Okay, I'm spending too much." Of course, every 10 days I pay off my balance.
Michael Douglass: Got it. Of course sometimes you buy a plane ticket to wherever. There are things that affect that, but you should be aware of and tracking those purchases. The one place I'll say I don't put on my credit card is my rent. That's because...
Hamilton: I wish we could.
Douglass: My apartment complex doesn't let me, but a lot of them will also charge a 3% fee or whatever. If you're paying a 3% fee to get 2% back, that is obviously a losing proposition, so something to keep an eye on. Sometimes I've noticed that with government services, sometimes they'll charge a 2% or 3% convenience charge. Depending on your card, that may not make sense for you. It usually hasn't for me, but it just kind of depends on your personal circumstances, so keep an eye on that.
Hamilton: I think we can say any place that's accustomed to taking paper checks still is probably somebody that's going to charge you a transaction fee on your credit card purchase, but I would love if a rent specific company comes out and says, "You can pay easily with credit, and we're not going to charge you a transaction fee." Because I would love to put my monthly rent on credit, but I pay with check.
Douglass: It is one of your...housing is usually one of your biggest expenses, right?
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