The #1 tip anyone will ever tell you about credit cards is this: Pay your bill.
And if you can't do that, or worry about that, the second most popular advice is: Don't have credit cards.
Translation: Use your card all month, and when you get the bill just pay it. Good luck!
Well I hate this advice because it depends on your past self being responsible, and there's nothing to do to help your future self. Your past self gave you that bill! Do you want to pay it? Sure, probably, you know it's a great idea! Can you pay it? Who knows! If you could, if everyone could, America wouldn't be swimming in credit card debt!
So my #1 tip is different: Plan Ahead
This may involve reading your credit card statement - something that almost no one does anymore because who needs paper mail when you have an app to just tell you what's due, but if you're smart you can find a place to download a PDF. Every card is different, maybe you don't need to find your statement to figure out what your purchase total was last month, but that is the number you need.
Here's what goes in the plan:
1) What will you use the credit card for next month?
You can set this up even if you don't have a card yet. If you're using it for groceries, great, what do you spend on groceries? If you're using it for frivolous shopping, okay, what is your budget for frivolous shopping? I don't care what you're using it for, so long as you know in advance how much those things cost.
If you already have a card this step is easier - you print out that statement and go through it with a highlighter. Separate out the line items that will happen from the ones that don't spark joy. Now you have a goal.
2) What will the "purchases" total amount to?
Don't worry about the end balance for now - if you're in debt, there's a balance there, and it might scare you, and maybe you want it to be zero, don't we all want that? But the most important number is "purchases". The math is simple...
If your purchase total is more than the payment you can afford from your income, you're going into debt.
If it's less, you're climbing out of it.
You take your paychecks. Subtract the "non card" stuff - maybe the rent and electric bill come out of your checking account. What's left if what you have to put towards the card. What is that amount?
3) How will you track your purchases?
Monthly statements can make tracking difficult because we don't think in months. We buy food more often than that - every week would be great, for some of us it's day to day. Fine, whatever, but your daily spend needs to somehow add up to your monthly goal. There are apps to make sure you're staying in the lines, maybe you just have a spreadsheet. The Chase credit card app shows me daily or weekly spend at a glance including pending transfers, so that's my card I use for routine spending and groceries.
And that's it. Question #2 is probably the most important - if you aren't predicting your transaction/purchase total there's a chance you can be surprised at the end of the month. Credit cards aren't your enemy, surprises are. I am really determined to meet my spending goals so I even have a separate card for the "surprise" category - car repairs and vet bills that we HAVE to pay, but are not the grocery/spending budget. At the end of the year I can total those up to see what's "normal", base my emergency fund balance on that amount, and invest the rest.
Credit cards are convenient and can be rewarding if you're paying them down every month, but that depends on having a good plan in advance of getting that bill. With the right plan, it will all work out.
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