You work hard every day, but you need your money to work even harder. That’s where credit-only spending can be a powerful financial tool—especially with holidays and a whole new year right around the corner.
Using credit for the spending you already do lets you track your spending, earn cashback and maybe even reap rewards in the process. Yes, using credit cards for all or most of your cyclical spending takes skill, practice and discipline. It also requires steady, reliable income and solid, available credit. But even if it’s not a strategy you’re ready to deep-dive into right now, it can be an ambitious financial goal to work toward.
How you use a credit card determines whether it becomes a tool that gives you financial leverage or a burden that limits you. The key is in staying within your budget and your income so that you can pay balances off in full each month. That can open the door to higher credit scores, increased credit limits, lower interest rates — and maybe even additional incentives.
If you use your credit for planned expenditures that you know you’re going to make regardless, you’re still staying within your means. It’s the money you’re regularly spending each day, each week and each month on everything from car insurance and utility bills to groceries, gas, gifts and other discretionary spending. If you use credit, you’ll still be spending the same amounts, but you’ll be doing it on your terms and reaping some benefits in the process.
1. Manage Cash Flow
Do a number of bills or expenditures stretch your bottom line simply because their timing conflicts with your timing? Typically, a majority of bills are due at the beginning of the month, stripping your cash and leaving you to eke your way through to the end of the month. Using credit lets you even out the dips and bumps into a more level financial landscape.
2. Track Spending
Paying with credit gives you an easy way of organizing expenses. You have one monthly record of everything you—or anyone with access to your account—paid for or bought within a billing cycle. You don’t have to go through scattered hard-copy or e-receipts trying to check dates and account for where all the money went.
As an added bonus, if something goes wrong with a purchase, you’ll have all of your receipts in one place complete with documentation—and the ability to easily get your money back if it wasn’t you who made the purchase.
3. Collect Rewards
Paying for all of your expenses with a credit card lets you earn rewards rapidly—points for every dollar spent or cashback incentives when you meet qualifying spending, for example. If you maintain rolling charges that you pay off each month, by the end of a year, you’ll have accrued a nice chunk of change in cashback or online purchasing power that might be exactly what you need to make the holidays extra special.
Over the longer term, if you use your credit card for all of your purchases and pay off balances monthly, you’ll not only avoid interest for those purchases, but you’ll also build your credit history and score. This will make you eligible for more favorable interest rates in the future—for any kind of credit or loan.
Get rewarded for handling your money well with credit-only spending. Relax your cash flow, track your spending habits, and collect rewards for the purchases you make every day. If you’re looking for a card that can do all of that and more, reach out to the financial experts at La Capitol Federal Credit Union. Let us show you how you can change up your financial strategy to make the most of your money.