How to Use Credit Cards to Simplify Your Finances
May 28, 2007
Want to keep on top of your spending with minimal time & effort? Not only do credit cards offer cash back, if used properly they can also help you simplify & organize your finances.
Use Credit Cards Wisely
As I mentioned the other day, we use American Express Blue Cash to earn cash back but we only use this approach because we’re responsible with our spending and pay off our balance in full each month. If you’re not confident you can be responsible with a credit card then using it to earn cash back and organize your finances in not a smart move.
Tracking Your Finances
One of my favorite things about using a credit card is it makes it easy to keep track of what you’re spending your money on with little effort. All of the cards I’ve ever used have features where you can download the last several months of activity to your computer. They typically offer direct downloads into Quicken, QuickBooks and Microsoft Money or you can save the data on your PC in a QIF, CSV, or Excel format.
I often download directly into Quicken and save it off as a CSV in case I want to use it for some other purpose later on. One thing to keep in mind is that many credit card companies only store your data for three or four months so make sure you keep up to date on your downloads.
Keeping It Simple
The ideal approach would be to use only one credit card so you only have to download information from one company. Since some merchants don’t accept American Express, I keep a Chase Visa card as a backup so I have to manage two different cards. The fewer you have, the easier it is to keep up with downloads and payments
Electronic Statement Archive
In addition to offering the capability to download your spending data, many companies also offer electronic statements where you can view current and old statements online in HTML or PDF format. They keep your statements online for several years, making it easy to go back on check on old statements. If your bill is stored in PDF format you can also easily save it to your computer to keep your own statement archive.
In an effort to save money on printing & mailing costs many credit card companies are urging customers so sign-up for electronic delivery only. They may not give you access to online statements unless you agree to stop receiving paper documents in the mail and only view them on the Web.
Analyzing Your Spending
Once you have your spending data downloaded onto your desktop or into personal finance software such as Quicken or Microsoft Money you can use that information to look for trends in your spending and make any necessary adjustments to your budget.
Both Money & Quicken offer great reports and charts that categorize your spending and give you a good overview of where your money goes. You may have to manually set categories for your purchases but some credit card companies help you save time by including the category for each purchase when you download your spending data into personal finance software.
Some credit card companies provide analysis of your purchases on their website, without even having to go through different software. For example, our Blue Cash card has a year end summary online that breaks spending down by categories. I can tell from a quick glance that we spent $1,745.85 eating out and $4,645.07 on our car last year. Of course if you use multiple credit cards you’ll have to consolidate this information to see the bigger picture.
Simplifying Your Finances
So how do all of these things simply my finances? The answer is one simple word, time. Having your credit card data and statements in one place, easy to access, categorized, and summarized gives you a quick and easy window into your spending habits. The best part is it requires minimal effort from you, which saves time. If you have a million things going on in your life like I do, keeping it simple and quick will mean you’re more likely to keep up to date on your money.
Credit Card Benefits
This is especially true when you are traveling on the road, and don’t have the necessary tools to keep track of your spending.
For me, I would wait for the statement to arrive or check it via my internet banking to download all the data for the spending analysis.
No matter how hard I try, I am will always loose at less 1 receipts while I am traveling.
Applying for credit cards online can be an extremely simple process”" and it really is. The most difficult thing is to know how to manage your credit card, so to say the first steps are the most crucial. A good beginning makes a good ending, do not forget.
Simplifying finances shouldn’t be separated from saving, as overspending will never result in simple finance management. So one should choose the card according to his spending habits: for those who do not spend much, low APR credit card with no annual fee is a good choice, as rewards is not the primary need for them.
[...] How To Use Credit Cards To Simplify Your Finances I’m a big fan of using credit cards for the convenience factor, but one should never, ever use them if they don’t have the cash on hand to back the purchases up. (@ money smart life) [...]
Weekly Roundup – 06/01/07…
Another week, another weekly roundup… But before we jump into the links, I just wanted to let you a heads up about something… In case you haven’t noticed, FiveCentNickel has been loading somewhat slowly recently. This is primarily due…
[...] – Money Smart Life says that credit cards can simply your finances. They can be helpful budgeting tools, but I find Money and Quicken too difficult… I’ll be going with Mint when it’s ready. [...]
Carnival of Personal Finance #103: The 24 Edition…
I have to admit, I was quite disappointed in the TV show 24 this year. Jack Bauer just didn’t seem himself, so I decided to give Jack a call and find out what he did after he left the beach house. This week’s Carnival of Personal Finance wi…
[...] be responsible with a credit card you probably shouldn’t own one but used correctly a credit card can be a great financial tool. Written on September 7, 2007 Under » Best Credit Cards, Credit [...]
[...] key to your credit cards to work for you and your finances is to minimize how often you use them, pay them on time and in full if at all possible, and limit [...]
The best way one can be debt free is to have a proper budget in hand. Paying off your debts should be the first priority every month. The moment I receive my paycheck, I set aside money to pay off my creditors then calculate other household expenses – set aside that money too and then if I’m left with anything, put it into savings. A lot of you do this already but some of you may not have yet made this a habit. Organizing your finances will help you become debt free sooner than you had actually expected.
[...] Money Smart Life: Looks at how credit cards can be used to make fiancés simple. [...]