How Can Credit Cards Help With Personal Budgeting?

Information verified correct on October 22nd, 2016
Credit Card Budgeting

Learn how a credit card can help your budgeting efforts

Most people would think that using a credit card for personal budgeting seems absurd. It’s really not. It takes the same type of discipline as it does using cash and it’s more convenient.

The stigma with credit cards is based on the fact that people overspend, but this won’t happen if you’re disciplined and stick to what you can afford. Read on to find out how a credit card can help you budget, and some general budget tips.

The benefits of using your credit card

There are many advantages when using a credit card with your budgeting.

  • Track your spending.
    With credit cards, it’s very easy to see exactly where your money is going because you get a statement every month that tells you clearly. There are even some cards which categorise your spending so you can see which areas you might need to cut back on.
  • Use certain cards for certain purchases.
    You can designate certain credit cards for certain purchases and this can definitely help with your personal budgeting. For example, you can use one card solely for your petrol purchases. This way, you know exactly how much you are spending on petrol each month and there is no tallying of numbers. The statement has all of the information for you.
  • Get value back.
    Some cards offer rewards which can help you get more value out your credit card. Some of these rewards, such as gift cards and cash backs can directly help your budget.

Budgeting tips

The above tips are great when worked into the foundations of budgeting. These include:

  1. Spend less. Stop spending money on things you don’t need. This will allow you to figure out how much money you really need to survive and how much you’re wasting on frivolous expenditures. It’s easy to cut out big purchases but the small ones add up too. Instead of stopping for a coffee on the way to work, imagine how much you would save by making it at home and carrying a thermos. Now stop imagining and look at the calculation we did. One cup of coffee costing $3.50 would equal $875 when multiplied by over 250 days (the average business days in a year).
  2. Figure out how much you really owe. It’s going to be scary and maybe even painful to admit how far you have let things slide, but it must be done. Create a list of all of your debts so you know exactly what you must pay off.
  3. Set up benchmarks and goals. Think about the final product of your budgeting – a life free of debt and with enough money to pay for your expenses. Then work back from this and set little goals to help you reach them. Maybe you can even find a debt-crunching buddy to help motivate you and keep you on track to reach your goals.
  4. Put your plan down on paper. Sit down and write out what you intend to do and your goals. Then post it somewhere you will see it often like in the kitchen or the bathroom mirror. Include all of your expenses and how you can cut them down.
  5. Write down everything you spend your money on. You will be surprised at just how much you spend on groceries and petrol. So surprised that you might be appalled enough to find cheaper alternatives.
  6. Pay off the bills that cost the most first. Any large bills collect more in interest simply because of their size. Once they are paid you will feel better because you will have freed up loads of cash.
  7. Keep an eye on the interest and fees for your bills. These costs can add to your debt. Look around for options that give you lower charges or contact your lenders to see if they will cut some of their costs. Try not to default on your bills. Instead ask for a payment plan.
  8. Try to pay as much as you can each month. Minimum payments won’t do much at all to reduce your balance. Try to pay double or more each month and you will really make progress on credit debts. A credit card interest calculator can be a good tool to work out how much you need to spend to pay your debt off.
  9. Figure out what motivates you. If you need someone to check up on you to keep you on track then find someone willing to help you.
  10. Take your time. You did not get into debt over night and you are not going to get out of it overnight either. Just try to stay positive and remember that it will all be worth once you are debt free.

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Credit Cards Comparison

Rates last updated October 22nd, 2016
Purchase rate (p.a.) Balance transfer rate (p.a.) Annual fee
Virgin Australia Velocity Flyer Card - Balance Transfer Offer
Enjoy a 0% p.a. balance transfer offer for 18 months and also earn 2 bonus Velocity Points in the first 3 months on everyday spend.
20.74% p.a. 0% p.a. for 18 months $64 p.a. annual fee for the first year ($129 p.a. thereafter) Go to site More info
ME Bank frank Credit Card
Enjoy a low and consistent interest rate on purchases and cash advances, combined with no annual fee.
11.99% p.a. $0 p.a. Go to site More info
HSBC Platinum Credit Card
Receive a full annual fee refund and save $149 if you meet the $6,000 spend requirement. Enjoy a balance transfer offer and platinum card benefits such as complimentary insurances and concierge services.
19.99% p.a. 0% p.a. for 15 months $149 p.a. Go to site More info
NAB Low Rate Credit Card
The NAB Low Rate Card offers 0% p.a. on purchases and balance transfers for 15 months. This card also comes with a low annual fee.
0% p.a. for 15 months (reverts to 13.99% p.a.) 0% p.a. for 15 months with a one off 3% balance transfer fee $59 p.a. Go to site More info

* The credit card offers compared on this page are chosen from a range of credit cards has access to track details from and is not representative of all the products available in the market. Products are displayed in no particular order or ranking. The use of terms 'Best' and 'Top' are not product ratings and are subject to our disclaimer. You should consider seeking independent financial advice and consider your own personal financial circumstances when comparing cards.

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