Use Credit Cards to Manage Personal Finances

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In response to your query: Can credit cards streamline your finances? How can you use credit cards to manage your money without getting deep into debt?

Yes, credit cards can be used to streamline your finances. I often strongly advocate that small business owners use credit cards to track and categorize spending better. However, individuals can do the same with their personal credit cards. American Express is the best, in terms of categorization and tracking. AmEx breaks each bill into separate categories and summarizes the total for each category. This way you can clearly and readily see what your expenditures are in each category (i.e., travel, food, beauty). In addition, the traditional AmEx is more of a charge card. Therefore, for most purchases on the traditional AmEx, you must pay in full in within 25-30 days of the billing date. This ensures that you don’t run up your card and end up with a lot of credit card debt.

If you like to travel, using your credit cards can be doubly advantageous. Many hotel brands and airlines offer branded credit cards that provide you with reward points for purchases, often doubled for travel or related purchases, such as gas. These points can add up quickly and provide you with enough points to pay for all or a portion of weekend getaways or a longer vacation. Thus, you save the hundreds to thousands of dollars you would normally need.

Finally, if you do not have AmEx, some Visa and MasterCard issuers offer similar categorization online. You can charge all your regular bills plus your typical expenses and an amount needed for fun. Instead of paying $2,000 in bills and debits (phone, groceries, gas, etc.) from your checking account scores of times throughout the month, you charge everything, then make one payment from your checking account each month. You can see trends and catch vendor mistakes or overbills. Regarding the latter, you have more time and negotiating power with credit charges than you do with debit charges.

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