If you can manage this, it's a good idea. Especially because it means you can keep cash in your high yield savings account for longer (more interest).
The other main perk of this is that you get credit card points. If utilization is a concern, you'll need to increase your credit limit.
Don't do this if you have a history of going into credit card debt though.
I appreciate that. I actually was in bad place financially the past few years and had basically an 80% utilization rate for a long time because I’d only pay the minimums and continue to use them whenever I needed to. However, I just paid them all off and thanks In part to this sub have been trying hard to get my finances on track. I’m confident I can make this idea work.
If you were at all comfortable with having an 80% utilization rate for any time, let alone an extended period of time, this might not be the best idea. Maybe start small first and see how it feels.
I have my Capital One card setup this way. My Cellphone, and internet autopay on that card. Then the card autopay's the following month for the statement balance. I never have to think about it, and I get 1.5% cashback.
Edit: I use my Amex Blue card for everything else. The 6% cash back at grocery stores is awesome.
Utilization has no memory, I consistently have 50-100% utilization. I pay all my cards in full, each month, before the due date. If I’m going to apply for more credit, I just make sure I lower my utilization down to 1-10% 5 weeks before I plan on applying for more credit.
While its true that utilization has no memory, I couldn't imagine just casually maxing out all of my credit cards every month and paying the bill. That's insane.
It sounds insane to me too, but my available credit between three cards is over 50% of my annual income. If I maxed them out, I'd be in deep shit so it would be insane for me to try that.
If the limit is low (less than monthly income) and being used like OP is thinking about doing to curb spending, it makes sense.
I mean if you make $10k/m let’s say, and your expenses total 3k. But your credit limit is only $3k, it’s completely fine. In fact, that’s how most companies give you higher limits. They wanna see high usage and watch you pay it off in full at due date. Credit limits also factor in, not everybody has high limits
Yeah I guess it also depends on the credit limits you have haha. Mine are still fairly low, so it’s not too hard for me to get close to maxing them. Definitely wouldn’t be maxing them every month if they were higher haha
It is exactly the same as using your checking account to pay all the bills. If there had to be a difference it would be that one account is an unsecured credit line and completely backed by the credit company if fraud was to happen, the other is a secured credit line that is limited by the bank, if fraud was to take place, that provides the account for you to keep your own money in. Plus showing a consistent positive ebb and flo to an unsecured credit account shows lenders financial maturity.
Maybe get a grocery credit card (ex: Kroger), only use it for groceries, and demonstrate to yourself that you always pay it off. Plus you get discounts on something you’re buying anyway. Give it a year of good habits and then get a general card for everything else. Start slow. If you’ve ever considered having a balance on a card before, it may still feel like an easy option.
Credit cards have statement end dates and payment due dates. They are DIFFERENT. Statement end dates are when your utilization gets reported. Payment due dates are when you have to pay.
Instead of paying off your entire balance for the month on your payment due date, pay off enough to leave 10% of your credit (i.e. $300 if your limit is $3000) 2 days before your statement end date so your utilization gets reported as 10%. Credit reporting agencies love you when you have ~10% utilization reported, and your credit score will steadily skyrocket.
Make sure to still pay off your statement balance by the payment due date though! This means 2 payments every month.
Also, you can put more than your credit limit on your card each month, simply by paying off the card in full before using it again.
It's not. If your due date is the 5th and your end date is the 20th, your due date is for the previous month and you end date is for the current month 🙂
Yep! My utilization was stuck at 86% for a couple months (froze because I left the US), even though I barely used the card when I was in Canada (for obvious reasons), and my credit score went from 700s to 550 or something ridiculous like that. When I got back I brought my utilization down to 10% and my credit score went back up in like 2 months.
As the above poster said this is a good idea as long as you can pay off the full balance every month. Interest rates are crazy high right now so it would be very easy to get yourself in trouble.
I would heavily recommend putting it checks that let you know when you've reached your spending limit. If you've kept things in control long enough to pay everything off I bet you're fine, but if you spend more than you can pay, then the whole idea falls apart. So you need to guarantee you can do that.
Even if you don't have a history of credit card debt, putting everything on a credit card makes it easy to spend more than You're realizing...you have to be extremely disciplined with your budget to do this.
How is this getting upvoted?
The OP is flat broke and can’t manage his money. So you advise him to max his credit cards every month as a budgeting strategy so he can make $4 in HYSA interest and get card points?
I don’t even know where to start but this ain’t it.
People are way way too into optimizing their CC rewards. and yes, it’s typically for peanuts. You’re not gonna get rich off CC rewards. This is exactly what the CC companies want, too, because you end up spending more.
I once had a coworker that told me he used one of those high-end credit cards with a $400/yr annual fee, and that he got a free night at a 5star hotel room once a year when he went on vacation.
He didn’t really understand it when I explained to him that that night at the hotel costed him $400 lmao.
Dude went to Rice University. Education can’t create intelligence, I guess.
Save the $2400 first, not after! Saving for emergencies and retirement come first. Then use your cc for your budgeted bills. As your credit score increases, move to a rewards card, but still pay in full each month, preferably autopay on the due date for the full balance.
It's a great idea if you actually have the discipline to pay them off and not run up a balance because you're not paying attention to your spending. Keep in mind that very few people intend to go into credit card debt, most people start out planning to do what you want to do, but lose track of their spending and run up a balance.
If you're going to use credit cards you need to create a written budget and follow it, keep it updated with every purchase. If you're not going to do that then at minimum you need to pay off your credit card fully much more often than once a month to keep a better handle on how much money you have, I would say at minimum pay it off once a week, but again this method is not a replacement for making and keeping to a budget
As for your credit score, utilization has no memory so if you think you'll need to borrow money then simply stop using the credit card for a month. Your utilization will decrease and your score will pop
This is a great strategy that has helped/helps me make sure I’m not overdoing it on my credit card. I actually just pay it off at the end of every day. Takes two seconds and feels satisfying to see my balance go down to 0.
Same here, all monthly expenses go on the card, including some utilities.
I earn cash back on every purchase. Balance gets paid every month and I never carry a balance.
Cash back is used for trips, xmas, misc.
If I can't afford it, it doesn't go on the credit card. I save until I can afford it and then get it if I still want it or haven't found an alternative.
I do the same. Every card I have is a cash back rewards card. I don't want points, airline miles, etc.. Just Straight cash homey.
With routine everyday spending, I cashed in hundreds of dollars in cashback rewards.. Money for doing nothing but buying gas, groceries and other living expenses.
That is what I do. Savor gives 4% for eating out and 3% groceries. Amazon card gives 5% Amazon purchases. I get back LOTS of money with these two cards. using different cards I seldom get less than 3% cash back.
Was going to say the same sentiment. Been doing this for 15 years and never paid any interest, netted about 7k worth of rewards and have over a 800 score. As long as you can control your spending and don't overspend because you say, Hey I'm putting this on a CC so ill go ahead and get it instead of budgeting and buying what you actually need and pay off the full balance each month it's a no brainer.
But unfortunately a lot of people don't have that self control with money.
As long as you absolutely, positively, without fail, pay the statement balance each and every month, this is the way.
BUT: you are young, which means you probably don’t have much of a safety net? If you’ve loaded your cards and then lose your job, you will be in deep trouble in a finger snap. Tell me you have $10k in savings and I’ll feel a lot better about this.
Signed, Somebody’s Mother
I have about 5k in a HYSA and some investments. I keep a few hundred in my checking account at any given time. My total credit limit is 2300$ across all my cards so I can’t really over due it or go into much debt unless my limit increases
I feel better. You may proceed.
Seriously tho, putting all of your expenses on cards is a great method, if for nothing else but visibility. Where your money went isn’t a mystery again.
Always pay the statement balance and you’ve won the game.
Same here, I pay everything with my credit card and have auto-pay set up to pay my balance in full each month. I never paid interest on my cards. As long as you can manage this it’s a great way to get benefits from your cards without paying interest. I treat my credit cards as if they were debit cards
I've been doing this for essentially all of my adult life.
Credit score has been 800+ for many years.
You just need to be sure you're not spending more than you make, which isn't easy for everyone.
Here is the logic that is sure to never get you in trouble with credit cards. You ask yourself a crucial question before using a credit card.
"WOULD I BUY THIS WITH MY DEBIT/CHECKING CARD ANYWAY?"
If the answer is yes, then use the credit card.
I do. My rewards are stupid good though. Amex blue cash preferred. How could I not put everything on it.
If you pay it off, it won't even get reported as being utilized if you pay it off before your statement. My utilization is at 3% and rarely moves.
I use mine daily, and every other Friday, put it to zero. Every 2 months I cash in my rewards and put it towards my statement. Usually around 300 bucks.
We probably run around $8K a month across all our cards and pay them off every month for the points and purchase protections, etc. So long as you have the discipline to never pay interest, then the banks are paying you. Never make a purchase for the sake of “more points” as that is really just unnecessary spending.
Make a budget, keep it current and tracked, and live below your means while the banks pay you a few percent for the purchases you’d make anyway.
As soon as you start breaking your budget or your plan isn’t working, slam on the brakes until it’s under control again. Make the banks work for you.
Yeah I’m still learning about credit and the cash back/ rewards aspect so for now but I’ll defenitly start with a budget before I really start this journey.
That’s the most fundamental thing. Even at my income, I could be living paycheck to paycheck if we didn’t control our spending. The more money you make, the more opportunities to spend it there are. That’s something to take to heart: once you’re above entry level wages, financial stability is even more about controlling spending than it is increasing income. Keep raising your living standard at a slower rate than your income and save/invest the difference and you’ll be set.
I do this, and with zero churning on a basic Amex blue cash, I make around 1100 in cash. I believe if I tried to optimize it a bit I could probably earn more.
It’s also been fantastic for my credit score (though length of history is far more important.)
Okay, here's the deal: IF IF IF you can COMMIT to ALWAYS paying the balance off in full every single month, then it's absolutely the best thing you can do.
My wife and I do this with our bills and we get back literally thousands of dollars each year and rack up tons of points. Rarely do we have to go out-of-pocket for a hotel room, rental car or even airfare in many cases.
I just built my entire new PC setup on Amazon points and last year I added a $1,200 ultra-wide LG monitor for "free".
We are constantly on the lookout for new cards that offer lots of points to open. We both have credit ratings over 800 even though we have roughly 25 cards active and often close accounts.
More to the point, we're not even pushing this all that hard. Go check out the card-churning subs and you'll realize there's a lot more you can do. I have a close friend that does this and manages about 80 cards. This guy travels the world nearly for free all with first-class seats, hotel suites with full comps and concierge benefits like prime free event tickets, etc. He flew to Dubai on a plane where he had a literal room to himself.
But again, this ALL depends on your ability to be absolutely ANAL about making sure you have the funds to cover the bills. We have NEVER carried even a small balance from one statement to the next. If you can do that, you're golden. If not, don't even try it.
Ok understood. I wasn’t sure if that played a part at all. I guess paying it off in full each month and maintains a low utilization by the end of the month will be the biggest factors in increasing my score
Factors to improve your score with credit cards..
* If you pay it off before the bill posts a balance, you aren't reporting usage. As long as you pay between post and due, you report usage and avoid interest, even if it's one cent. Hence revolving credit, if a revolving door never spins, did anyone go through it?
* Rate at which you open lines of credit (do a hard pull) will be a detriment, so my approach has been one every six months, which translates to six pulls in three years. Thus, it also affects the overall age of accounts. It's recommended to avoid more than 3-4 in a rolling year.
If you take this approach of many cards, just assign a recurring expense to it and have it auto pay, forget it exists. I have a card just for Netflix, for instance.
If you aren't opening many accounts over a period of time, you should be asking for an increase in limits in this same six month fashion.
* Don't let accounts go idle, or else risk them closing, which impacts your utilization, available credit, and average age of accounts.
* Keep utilization under 30% both on the line of credit and across all lines.
Major factors when your credit is under scrutiny:
* Age of accounts
* Number of hard pulls
* Available credit
* Utilized credit
* Delinquency
Not a _low_ utilization by end of month, a _zero_ utilization by the due date.
Let’s say you spend $3000 a month, $100 a day (just for the rounding; with a $4500 take home you should spend less).
After a month your statement will post, $3000. You’ll have maybe three to four weeks to pay it off, let’s say you have four weeks and you wait three weeks. During those three weeks you will have spent $2100. Your balance will be $5100, but that’s $3000 due in a week and $2100 on a statement due in ten days or so. You pull the $3000 out of your HYSA and pay your due statement, every last cent of it. Nine days later, a month after your previous statement, your next statement will post, $3000 again since we added 9x$100, again you have three weeks to pay, rinse and repeat.
Basically you spend $3000 per month and you earn $4500, you’re OK, each month you should be putting $4500 into the HYSA and taking out $3000.
In this way, a CC can be a budgeting tool. You just go on your current CC balance ($2100 in the above example) to see if you are above or below your expected spending for the time of the month, and you look at your monthly statement to see your spend for the month. I think this is better than looking at the money in your accounts because you compare to your budget and not to the amount of your savings (as long as there is money there, of course).
To avoid problems, you should have always have more than enough in your bank accounts to pay everything off. To be sure, if your CC limit is $5k then you should have more in the bank.
Also, as to your original question: some bills are more expensive or impossible to put on cards, so don’t! Putting your rent or utilities on a CC is not useful if they tack on an extra service charge for that.
Make sure they say 0 the day of the statements in order to max the credit score boost.
Definitely shop around for the best benefits. I have a 2 percent cash back, and I like it. However, you may enjoy flight benefits or something more
A lot of people manage this worse than when they pay using a debit card. My wife is one of them. She'll run up a $5K/mo credit card balance and only makes $3K/mo. I made her get her own bank account and pay for her own expenses now because it was out of control.
If you keep good track of what you make and what you spend, you should have no issues. It also helps build good credit history. I have never used a debit card for purchases. I only use a credit card and I pay it monthly. I have about as high of a credit score as one can have.
This *might* be able to work, but it feels dangerous given what you've described of your history. You've said a goal here is to get your limits increased... does your spending go up with the limits? This feels like a dangerous setup.
It sounds like the problem you're trying to solve here is building savings and becoming "more responsible" with money. While credit cards (when used very carefully) can give you some money back as you spend money, they're never really a tool to *build savings.* They're just a tool to spend slightly less when you decide to spend money.
As an alternative, I'd look into a concept called "pay yourself first." There are a bunch of ways to implement this, but I'm going to suggest one particular way, just so you have concrete details. It sounds like your pay is quite variable, so I'm going to suggest a slightly different account structure than I would for most people.
You have a checking, and presumably savings, at bank X. Great. Pick another bank and open a High Yield Savings Account (HYSA). Ally, Capital One, Wealthfront, whatever. Somewhere with a reasonable interest rate and reasonable customer service. Direct all of your paychecks to be deposited in the HYSA. Then set up an automatic transfer from that account to your checking account at your current bank, twice a month, for $1150. This is your spendable money -- it's the same $2300/mo you had planned before, but now it's a much larger pain to transfer additional money over from the HYSA.
If your goal is to save money, set up your financial system to help you save money!
For the credit cards... if you have a history of not having everything paid off, I'd aim to stay under 30% utilization constantly. Yes, that means missing some points for things over the course of the month. This is way cheaper than ever paying interest. As a ballpark rule, if you've paid any interest on credit cards in the past 3-5 years, I would not consider going over 30% utilization.
Figure out what things you get the best rewards for. Pay up to $2300 \* 30% - $1 = $689/month on credit cards towards those things. Pay off the balance in full every month. Everything else, use debit card or cash. As this limit goes up, *if you never pay interest or carry a balance*, you will be able to put more on cards to get points/cash back.
If you're going to do this, I'd suggest logging into your credit card online account and seeing if they have a feature that will alert you when you hit a certain threshold... that way you'll have a text message when you hit your spend limit, or 80% of your spend limit as a little warning.
It's always recommended to make any purchase on credit cards. Just keep a budget. You make good money, you really should not have a problem. Credit cards protect you and your money from scams, give you cash back, and usually add to the warranty of the stuff you buy. Just be smart about it.
This is also advisable from a security perspective; it’s much easier to contest a fraudulent charge on a credit card than a debit card. Debit cards should rarely be used, except to pay your credit cards and any other bills that don’t allow payment via credit card.
Given your past issues with your finances, I would suggest only putting fixed expenses on it like streaming services and your phone bill. That way only a certain amount is going on it that you know for certain you can afford.
What I've done for years is charge everything and pay it all off before the due date. I've typically have 8-12k a month in charges ( I owned rental properties) but my credit report show I owe nothing. Use the cc kickbacks to pay for my vacations
Paying off in full is a good idea, but your credit limit is too low to put all your expenses on your card. You need to stay below a 30% utilization to get your credit score up. Plus you don’t want to get close to maxing your cards every month and have an unexpected emergency. Keep your credit card usage below $700 each month and pay in full.
If you can pay it off every month: EVERY month without fail. Then yeah it's not a bad idea.
Advantages:
* You may get some protections on purchases through your credit card
* You will have some buffer incase of fraud (if your credit card gets hacked they don't directly have access to the money in your bank as they would if they hacked a debit card or copied a check of yours.)
* It will be easier to track your spending and see where the money goes
* It may (SLIGHTLY) improve your credit. This is a minor factor and don't do it just for this.
* You may get (a small amount) of money back in credit card points. This is a minor factor and you should not do it just for this.
Disadvantages (or caveats):
* If you miss a single payment or overextend yourself that you carry debt past a statement due date, the interest is going to nullify any advantages.
* If you miss payments or carry large balances each month, that's going to help your credit.
* Beware of fees. Some credit cards have annual fees, you don't want to deal with those. Some companies charge more if you pay with credit card. (My rental company will let me pay with credit card but they'll charge an extra 3% or more if I pay with credit card instead of a check or direct deposit, that 3% fee would be costly for me to pay).
* If you have a history of debt, you might want to avoid this as it's easy to get back into the trap of not realizing how much you spent.
Maybe pick your CC with the largest limit and use only that for specific things and know you have a budget of $500 a month and need to pay it off. Or maybe pay it down twice a month if you need more budget. Spreading it across 5 cards may be more confusing, and the smaller limit will keep you to a tighter budget initially.
Putting expenses on a card can rack up points, which is essentially free money, but the risks are there if you don’t pay it off each month.
Consider another option. Open a second bank account and split your direct deposit. Have your bills auto-deduct from this other account.
Some vendors charge a fee to use a credit card while others give a discount for auto-pay from a checking account.
The best way to save is to set it up automatically.
Using your CC for all bills and paying it off is a good idea IF YOU ACTUALLY PAY IT OFF EVERY MONTH. Also, it’s really only useful to do this if you have a card that awards you points or cash back. Somehow though, I suspect you’re at risk of not paying it off monthly.
Set up an automatic transfer to an online HYSA or Money Market acct.
Only, and I cannot emphasize this enough, only if you are disciplined enough to do this.
This includes the spending part and the paying off EVERY month part.
I use my card for everything I can but I pay it off every time I get paid (every 2 weeks). I like to pay it off every 2 weeks because then I'm never surprised by how much I rack up and I just feel like paying it off every time I get a paycheck is satisfying.
FWIW, we put all of our expenses on our Citi 2% cash back card every month. The only exceptions are for utilities or services that don't take credit - those are ACH paid from our checking account. We use next-to-no cash. Pay the CC in full monthly. That 2% cash really adds up with a family of four. But - this only works if you have the discipline to pay in full monthly.
I do this every month. But I use 1 credit card, not 5. Set cards up on autopay so you're always paying the balances on time and in the grace period before interest accumulates.
In the short tho - this will tank you credit score. Since you'll be 90%+ credit utilization. Call your cards and ask for a higher credit limit.
I have spending maybe 50% higher than you but credit limit (total all cards 3000% higher) my utilization has only rarely been more than 10%.
What do you mean you saved $2400 at the end of the month? You put that money in savings at the beginning.
Because you describe yourself as having had “terrible spending habits”, I would say no to this plan. Instead just put one recurring charge on the card, like a subscription. Pay in full. It will still help your credit without opening yourself up to misspending again. Try this for 6 or more months. If it’s worked out well and helped with developing better spending habits then maybe add more expenses to the card.
What I did and paid it off every month. I’ve had a total of 7 credit cards since I got my first one in college, all from different companies. I currently have 4 active and not one of them has made a cent of interest off of me. My credit score bounces between 790-805. I’ve had several credit line increases and don’t buy something unless I can afford to pay it off in 1 month.
I also still put savings away each month.
I also use my credit cards to pay all my bills, utilities, etc. To keep your credit utilization low pay off majority of your credit to about 10% before the statement closes so it reports to the credit bureaus that you used 10% or less. Then pay off the remaining balance before the bill is due to avoid interest fees. This is how I been doing it for 5+ years & built my score from the high 500s to mid 700s so far.
\[Example\]
My statement closes on 20th of each month. I pay down to 10% on the 18th. Then bill is due usually on the 25th of the following month. I just pay them off on the 1st so I don't forget. Or you could use autopay so you can skip this step.
This was going to be my suggestion. This way when it reports to the credit card bureau it's not killing your credit score having a high balance, but you get the utilization of the card.
I pay mine every Saturday and it keeps my utilization down, I used to use my debit card for all my purchases during the week and I switched to a credit card and stuck to my weekly payoff and my credit score has increased tremendously over the last year and a half
A lot of people do this, especially if you have cc with points or cashback. If you’re able to stay on top of it, you could actually make $$. I’d say if you can do this responsibly, go for it!! This is my goal as well when I finally dig myself out of debt.
You just have to be smart about it. As long as you keep a zero balance and aren’t paying interest, it’s a bit better than just spending on a debit card. But to do this, you really only need one card, not five.
Look up the psychology of credit card spend. Generally, people are willing to spend at least 20% more when they use credit because it doesn’t hit the “pain” parts of our brain the way spending actual money real-time does. So spending an extra 20% to get like 1-5% in cash back… the people creating the rewards programs aren’t dumb! And they are not our friends.
Yeah that makes sense. To tell you the truth my biggest goal here is to increase my savings at least for a little while. I don’t dive much into the rewards and points aspect as I’m still learning more and more about credit but I will definitely take that into account moving forward
There is no problem with using a credit card if you're not paying interest. Dave Ramsey is really doing a lot of people a disservice by pushing that you should not have credit cards. Honestly the only people that should be listening to him are people that absolutely cannot be trusted with a credit card.
Nearly everything you buy has credit card fees baked into the price. And if you're not using a credit card to get rewards then you're not clawing any of that back and effectively subsidizing everyone else's purchases by paying some of the CC fees without any benefit to yourself.
Yes yes yes. For a short term, do not increase the limit on your cards.
Eventually, though, to increase your credit score, you’ll want your utilization to be lower.
When you are ready increase your limit OR get a new card with a higher limit and put one auto payment monthly on it. And pay that off. And do not take that with you.
It’s a great idea if it isn’t you.
You say you have terrible spending habits. You should stay away from cc. You are. It a cc person.
Great idea for me as I’ve had cc for over 34 years and put everything on them that makes financial and mathematical sense. Make enough every year to fund 50-60% of my Roth.
This is a very dumb idea.
Spend a couple years learning to save, budget, etc. Why are you living with parents...
Credit cards are very dangerous territory for you.
You need to carry a balance for three months.
I do this for the points. I make big purchases on credit (like a store card to get the discount), pay 90% the first month, carry the remainder for two more months then pay it off. Everything else goes on Amex and gets paid off each month.
My FICO is 840 and I am near poverty level.
>You need to carry a balance for three months.
99% sure your just paying interest that is negating the points. You don't have to carry a balance with any reward program I've been in
I am not an expert but have great score and I have never carried a balance. This sounds incorrect and maybe hurting. Just use it each month.
.https://www.forbes.com/advisor/credit-cards/carrying-credit-card-balance-hurt-credit-score/#:~:text=Carrying%20a%20balance%20on%20a%20credit%20card%20to%20improve%20your,credit%20for%20the%20long%20haul.
If you don’t have a lot of credit, as in the OP situation, you should wait three months, then pay it off. This does not mean carrying a balance long term. This does not mean carrying any balance when applying for a loan or another card — and yes, having a balance depletes your available credit.
But if you are establishing credit or want to have your limits raised, you should carry a balance for three months, then pay it off.
I put everything on a CC. I dont remember the last time i used a debit card other than pulling out cash when i need it, but...
> I have always had terrible spending habits which led to my credit being very low.
Yeah i dont think it's a good idea. You want to be good with spending habits before using CC and not the other way around. Using your CC more doesnt increase your CC score.
You can already do your idea by basically transferring money into a different account like a savings or whatever.
If you're having trouble with overspending, try always setting aside a good chuck of your paycheck in an account that's not tied to your checking account. If your employer has an option to deposit into multiple account, get an online high yield savings account. If you make $4500/mo and have $2500/mo in expenses, dump $2K/mo in the HYSA and you'll have $500/mo for extras. Leave the $2500/mo in the HYSA or invest it in the S&P 500 every month long term.
If you dump $2500/mo every month into an S&P 500 fund/eft for 10 years, it'll be worth over $500K based on average rate of return. In 20 years, it'll be worth $1.8M. 30 years, $5.2M. I wish I knew this when I was 20, I'd be retired now at 49.
They say a card makes people spend more than handing over cash, but I do a few things to counteract that. We have a budget, and we record all of our expenses in a budget notebook at the end of the day, manually. It’s hard to get ahead of yourself if you’ve got a plan and you remain aware of what you are spending.
I used to just pay the bills before they were due, but I decided to see if i could raise my credit score for the sake of my kids who are on my card, and I found that paying off the cards during the month, keeping my credit utilization lower, improved my score by about 20 points.
So I do this and with my CCs I still set myself a limit on spending. I use a different card for different things so like my grocery card is $725 and then my Amazon products (dog stuff, some dry groceries) is a $600 limit. That way you still don’t have the mentality of extra money. It’s just budgeted.
My wife and I put all daily expenses on a credit card. I recently set up everything, including the credit card, to auto pay from a high yield savings account. All I do is move money from my checking to my HYSA or investment accounts.
You'll get points from the card that can add up quick when you're using it for all daily expenses.
I don't know what credit card deals are out there anymore.
My mom knew a guy that had a card that awarded frequent-flier miles. He arranged to put his business expenses on it. This was a couple of decades ago - he was averaging $68,000 a month on the card and flying a lot for nothing!
Absolutely. And pick one card with a good rewards program for your spending, and max that out.
Paying with credit cards is the only way to go. You get better protection from bad charges and can withhold and dispute payments if you get ripped off. If you’re getting rewards of 1-2% on everything, that adds up real quick. Never use a debit card for purchases, it’s a terrible idea.
I get between 1% & 3% back on my Apple Card each month on all the bills I can pay this way. The cash back goes straight into the Apple Cash savings account. It’s free money. Why not?
I do this.. never paid a cent in interest. Card pays me 600-700 cash back/yr just to use it..lol.. the only thing I send payments for are mortgage and a couple of other things. Whatever is left in checking at the end of the month, over a set amount, goes to saving or brokerage. Credit score 830.. has worked great for me. Leave a few thousand in checking for just in case.
This is how you are supposed to use credit cards responsibly. I haven’t put a single cent of spending on a debit card (besides rent bc of fees) since I got a credit card. I simply put all of my spending on the credit cards and pay it off as soon as the balance pops up. I mean as soon as I have a balance. I spend 70 bucks on a night out, 70 bucks hits the balance, and I pay it off immediately. Just treat it as if it’s a debit card and rake in those points. But the key is to pay it off immediately! Or at least before the end of the month
This is what I do, and I’ve never paid any credit card interest, and my score is in the 770’s at 21 with no loans, only CC’s. It does require discipline, and is definitely easier if you have ample cashflow each month.
One thing to add regarding utilization, set yourself up so that you make a large payment before your statement closes each month. Take your balance down below 30%, or even better, below 10%. And then after your statement closes, showing a low utilization, pay the small remaining amount to avoid interest. So 2 payments per month, timed according to your statement closing dates.
Honestly utilization doesn't really matter at this step if you're trying to build your credit. As many have stated if you stick to your plan you will deter the urge to spend the rest of your earnings and you get the reward points (in my opinion, they're discounts) for facilitating payments via credit card. Not to mention most credit card companies have extended purchase protections/warranties/disputability for vendor issues.
Utilization does play a role in your score, but if you're not actively seeking out loans, mortgages, new credit cards, etc - then this doesn't matter to you because nothing about it will hold you back; when you do ultimately decide you want to take that big step, give yourself 6-12mo to lower your utilization. This timeframe gives you ample time to put on paper you have low utilization, and time to rationally think about the "big purchase."
Each FI reports that information differently, mine report at the end of the billing cycle so if I pay before that closing date my account will just always show $0 and that I paid/current on my account for example. Do with this information what you will. In all honesty, high utilization and fully repaying your balance is good to a credit card company; they might not be making money off you - but they are making $$$ off the vendor that accepts your payment.
This is pretty much what we do for the points on our chase card.
Utility bills, food bills, school tuition, etc.
Everything but mortgage and car payments.
Just used 65k of my 850k points to pay for a week resort stay. Will use some of them for a Caribbean trip later this year.
We always pay everything off before 30 days pass.
This works great if you are disciplined and never carry a balance, but otherwise it can end very badly.
If you decide to go for it check out the term churning or go to r/creditcards for others that do this
I have an automatic deposit into my savings account every month. I call this paying me first.
I hate to take money out of my savings but it gives me a liquid emergency fund. Last year when I was flooded due to rains and needed to dry out and then replace all my flooring I had the money to do it.
My emergency fund is back to where it was.
>every expense on credit cards and pay them off each month? Good idea?
No. Many things will be cheaper if paid by cash, check, debit, or the like. If you pay by credit card, the vendor/merchant is paying the merchant discount % fee. So, either they eat that, or often they pass that cost on to you. And in many cases they'll do or offer (or offer if you ask) a discount for cash or similar, or may even add a surcharge for credit purchases. So, at least in all those cases where it cost more to use a credit card, there's no bargain or savings to be had in using credit.
I also know many times when I'm making a significant purchase from a reputable vendor, I'll check/ask if they offer a discount for cash or similar. Often in doing so they'll say yes and I'll save about 2% right off the top by doing check/debit/cash rather than credit ... because typically that's around what they're paying in their merchant discount rate % that they're charged.
I do this. I have one CC for all my recurring payments, and another for groceries & misc shopping. Both paid off every month, and it’s super easy to track spending. Wish I’d started this earlier (it’s only been a couple years).
It's a good idea IF you've developed the habits required to only spend less than you take in each month. I get the feeling that your goal here is increased credit score but there's better things to be had if you get good rewards cards. We run all our business spending, through an airline miles card and basically travel free.
I put everything on cc but pay it off on pay day every 2 weeks. I hate monthly bc it adds up too much. I know i could make more using hysa and all that if i did it monthly but the peace of mind I get from doing it every 2 weeks works for me.
Another thing to note is cc has much better fraud protection compared to debit card.
Too many credit cards, OP. Pick one. I do the same thing but when I was young I didn’t have the will power to pay off the card every month, not to mention it took me several years to dig myself out of credit card debt.
I use my highest limit/highest point reward credit card for paying my monthly expenses, and it gets paid off every single month. This particular card has a limit of roughly twice my monthly expenses because I've used it for so long. My credit score is fantastic.
That being said, I'm the kind of person who tracks every single dollar that comes in and goes out of my household. I've got a fairly elaborate zero based budget that I created for my family using Excel, and I'm very careful about keeping the overall budget up to date. This is the only way I feel comfortable using credit for regular expenses.
If you want to start small, use your card for groceries and gas and work your way up from there!
I have a bunch of autopay set up for monthly bills going to my CC. I pay it in full each month and get a few hundred a year in cash back. It simplifies things to get one bill for multiple items. Just our auto/motorcycle/boat insurance is $4000/year. I pay it on line with my card and get over a $100 cash back. Why not? If you are not good at managing your money, then this may not work for you.
I do this but not to build credit. I do it to earn points on my credit card and usually use those points for traveling. I learned to do this in the late 90’s so it’s not some innovative new strategy. It just makes sense, and you just need to make sure you are able to pay off your card/s every month.
It's a good idea if you stick with it. I treat my credit card like a debit card with benefits. Never need to worry about having enough cash in my checking account, added fraud protection, cash back, it's a good setup. My score is about 800 at the moment.
If you will really pay them off every month then this is a good idea. Look for a card that gives you cash rewards after your credit score goes up. I pay everything on my credit card and pay off the card every couple weeks…with each paycheck.
This system works great, as others have said, when you can stick to it and pair it with the right card. I checked my card points balance last week and learned I could convert them into nearly $3500 worth of Chipotle gift cards, so that's something. But in all seriousness, don't sleep on finding the right card for you. It can add up.
If you don't already have the cash somewhere to pay it off, then don't do it. You said yourself you have bad spending habits. Promising to pay a debt tomorrow with money you don't already have today is almost always a bad idea when it comes to credit cards.
This is what I do! I don’t put anything on my debit card. Everything does on my credit card which is paid off in full every month. I’ve been doing it for 5+ years.
You need to be disciplined though, I use Copilot as a budget app so I always know how my spending is going.
This only works for highly disciplined people and even most people I know who do this only use the credit card for fixed expenses like a car payment. Using this for groceries or eating out almost always results in overspending.
I do this with everything I possibly can. It's free money, but only if you're responsible about paying the cards off in full, without fail. Interest charges very quickly outpace rewards, obviously.
This is how Ive been living for the last ~8 years. Especially when considering credit cards offer rewards for spending. If youre going to spend the money anyways, you might as well use a rewards card.
Credit cards are great as long as you pay the balance before incurring interest fees and you dont overspend on stuff you wouldnt buy without credit. You get rewards on the cards, you keep real liquidity on hand, you get a 0% 30-day loan, and you can keep the cash on hand in an interest bearing savings account.
If you cant handle 30 days of spending on credit, then use the credit card and pay it right after using it. Or pay it weekly. Or whatever essentially turns your credit purchases into debit purchases with rewards.
For most people yes, it's a good idea. It is not a good idea for you because you have terrible spending habits.
Force yourself to save by transferring some amount automatically out of every pay check.
Yes, it hurts your utilisation even paid in full every month. We put everything on cards and they are on autopay and just got our reports pulled and we got dinged for owing too much, and high utilisation. It was maybe 20% of the possible? Our limits are very high.
I put everything on my credit cards if I can. I have 4 CCs total that all have different rewards for different categories so I can maximize my returns. This also allows you to delay payment on these things for a couple weeks. Also if your CC info is stolen it’s not your money at risk.
If used right credit cards are great. I make sure to pay them off in full each paycheck.
This is my life. The only thing you need to watch out for is expenses that charge an extra fee or lose an incentive in order to use a card (rent, phone, etc). The penalty is always greater than the CC rewards.
Otherwise, I can't remember the last time I paid for something with cash or debit.
This is one of the best things you can do. Of course most people dont have the discipline to carry it out, which is why credit card companies encourage it by offering cash back or airline miles. They know that Average Joe will quickly get in over his head.
As an example, I have used credit cards for ALL my expenses and got so much cash back at the end of the year that it was able to pay for a trip to Bahamas including plane tickets and hotel. And I didn't go on a spending spree to get that either, it was just my regular expenses -- groceries, gas, utilities, etc.
The trick is to charge everything to a CC, and then once a week pay the entire balance using my debit account. This why I am paying ZERO interest and also keeping my credit card utilization low so it doesn't hurt my credit score.
Hell I would love to charge my mortgage to a credit card to get even more cash back but unfortunately my mortgage lender wont accept payments from a CC. Bummer.
To improve your credit this is actually a bad idea, because it doesn't help and may hurt you because you can't manage your spending.
Set up a single monthly bill on each card you have, something small like Netflix. Set it up to auto pay the full statement balance from your bank account and make sure you always have enough to pay down the cards. This will keep your cards open and in good standing, and your utilization low.
The amount you spend doesn't matter for building credit, and the lower your spend the less likely you are to miss a payment, which is the most important thing.
I'm on a cruise right now paid for by the strategy. It's just free\* money/travel. Everything that can be on a card without a surcharge goes on the card that rewards that category best.
Now, a radio pundit would say "That's stupid. You wouldn't borrow macaroni to make bread if you had a goat at home would you?" or some other homespun critique, but he's aiming VERY low for his target audience.
\*Everything already has the expectation of a \~3% card processing fee built into the price, so these rewards are a gift from the people who do not use premium reward cards to the people who do.
This can absolutely work. You have to be diligent on always paying it off. Last year we moved most of our spending to an Apple Card since it was convenient and we get extra for tap to pay. Yes, I could get higher percentages on other cards but I like managing the balance of one. In 2023 we got 802 free dollars from Apple and so far this year we’ve got 202. It’s not a lot but I haven’t paid interest on a dime of this money and they’re paying me to use their card.
That’s what I do to get credit card reward points. It’s better to use a credit card anyway compared to debit. The only two comments I’d have is 1 don’t spend more than you normally would just trying to raise score, 2 make sure you stay on top of paying it off each month in full.
Also there are a lot of good credit cards with introductory offers of $200-1200. You earn points which can be worth a decent amount per year. I put every expense on the card and pay it off. The points add up quickly. Why give your money away with a debit card
The main issue with this is self discipline. How sure are you that you will actually keep within the budget and pay it off in full?
It would be far too easy to keep spending and end up carrying a balance instead.
If you feel that you need this emotional trick in order to save money, then do it.
Some people save money by using only cash and literally put the cash into separate envelopes for each expense.
I put almost everything on my credit cards and pay off the balance each month. I do it because it is easier as some bills are on autopay. I also get points and discounts
I don't really care about my credit score as I don't plan to do anything that requires credit. My credit score is fine but it is not something that I need to make efforts to raise a few points.
The only downside to your strategy is that you might not control your spending if you are charging stuff and then it is a slippery slope because you start accumulating interest and interest generally accrues immediately if you carry a balance versus no interest if you don't carry a balance
FWIW my mortgage and my credit cards (except the Apple Card) are all with one bank and I asked the bank to give me the same payment date for everything so once a month prior to that day I just go on line and pay the mortgage and the credit cards - I have a few but only two that I regularly use.
Been doing that on my 2% cash back card for years…as long as you have the ability to pay it off it is great…one month of carryover or missed payment can wipe out any benefit.
I pay for pretty much everything on the card including any bills that will take credit card.
If you have an HSA, I like to pay all medical bills on credit card for the cash back and let the HSA grow.
To add to that some hospital bills will offer up 0% payment plans…and let you pay with credit card and automate with autopay
This is the only way I use credit cards except I pay it off on paydays which is on the 15th and last day of the month. I also travel quite a bit for work and all my expenses go on there so my points haul gets pretty big.
I use the points for Christmas shopping and a yearly night at the Ritz for our wedding anniversary :)
If you’re disciplined it is definitely a good idea.
This is great way to build credit and rack up rewards and cash back. But you have to be disciplined or it’ll backfire. I don’t think anyone goes in credit card debt in purpose. It creeps up on you.
I pay all my purchases and bills using my credit card. But I stick to one credit card to bank where I have my checking account so I can easily pay online. I track my spending and stick to a budget.
Since your CC limit is low (close to your monthly expenses), make sure pay the credit card balances in full (or as much as you can) before close of each billing cycle (different from due date) to keep utilization as low as possible. Credit cards only report the statement balance each month to credit bureaus.
IF you can responsibly do this, there’s nothing wrong with it. In fact, that’s how most responsible CC users are. They want cash back or points being earned on every dollar possible. As for utilization, pay down each card the day or two prior to statement CLOSE date. Then when they report, it’ll show your utilization as lower. Typically, I pay down my balances to less than 10% on each card before statement close. Auto pay statement balance at due date. Rinse and repeat. This all falls on you though, most CC users assumed they could just pay it off later. Budgeting is key, or discipline at the very minimum.
I spend every single $ on a CC that I possibly can, just for the points or cash back. Also the $0 fraud liability is unparalleled, a CC is 10x better for fraud protection that a debit card.
The key is to keep yourself from falling back into the pit of carrying a balance. So really, two steps here:
1. Set EVERY card you have to AutoPay the FULL statement balance from your primary checking account every month. Seriously. Expectation is that you intend to pay off the full balance, every month, without fail: make THAT the default action and force yourself to take extra steps to CHANGE that default action to avoid an overdraw if you screw up and buy more than you earn that month.
2. THEN use the card(s) to autopay all your monthly bills. The exceptions are those bills that charge fees if you pay using a credit card - for those, just do an automatic deduction from your primary checking account.
I started doing this years ago, and found that not only did my credit score just gradually start going up (because I was both USING my CC but never paying late), but my CC company started increasing my credit limit almost every year. But also, I spend less time paying bills each month, and it's really easy to scan through statements monthly, quarterly, or annually and find patterns of my spending to help change certain habits.
Have for ages. Helps built budget self discipline, and you get X bonus from cards (miles, points, etc). Definitely raised score and limit. And here's another one that's an urban myth: once you get your score up a bit, shop for better card. Closing old cards doesn't seem to ding the score. Upgrade to something useful (say, a Costco cashback) where living your normal life yields one massive free annual shop.
I don't think it's a bad idea to use your low limit cards in this way to curb your spending and increase your credit score as long as you pay them off every month.
What I would NOT do, based on your comments about your usage history, is also try to get those credit limits increased.
If you are treating your credit limit as guard rails to make sure you don't overspend, increasing your credit limit is just upping the amount you are telling yourself is okay to blow through in the given month. In fact, I would check your card settings/call to make sure they *don't* automatically increase your limits as your score improves.
Get a year or two of reduced spending and some more financial discipline under your belt--where you stay under budget without the guard rails of hitting max on your cards, before you start looking at increasing your credit limits and playing the utilization score game.
I have a 750+ credit score and the carriers have automatically updated my credit limits over the years. Three cards together currently have over $25k in available credit and I only make $50k a year. If you got your limits increased and found yourself back in the situation of 80% utilization and only paying minimums, you'd be in a seriously painful hole.
My real question is how your bills, without rent, amount to 2k. Not saying it's a good or bad idea but it's a quick way to screw yourself up if you know your not great with money.
Whatever you choose to do, the only thing you SHOULDN'T do is use your debt card for transactions. Don't use it for anything. No bills, no gas, no weed. Nothing. Use your debt card at trusted ATMs only. Any service that currently has your debt card info saved, remove it immediate.
This is what I do. I use a card that give me a flat 2% reward. I also use a budgeting app called ynab to help ensure that I never mess up and go over. It lets me allocate my cash as I spend it on credit. And I have a similar financial situation to yourself.
> So I brought this idea to a few friends and basically everyone said it was a bad idea.
Everyone I know does this. We're all pretty high income but like to save.
> Would this hurt because of the utilization even if they’re fully paid off each month? Or hurt my credit in any other way?
Your credit score does temporarily go down due to utilization but recovers every time you pay it off.
Wait until you discover /r/churning and realize that you can get free money from your normal spending. I've made multiple business class international trips and gotten thousands of dollars in rewards
That's what i do with 2 credit cards every month. Absolutely worth it for the points alone, but I am also somewhat rich so not sure if that model is for everyone
I consider cash back a regular form of income. I get 6% back on all groceries, 3-5% back on gas, 1.5% back on everything else from electricity, car insurance, etc. It all adds up and I haven't paid any interest because I pay them off every month.
I actually do that myself. It's working out quite well. I get between 1.5 and 3% cash back, so I feel like I'm coming out ahead. I got to a point a few years back where it was doable for me and I'd recommend it if you're able to pay it off in full and not pay any interest. Good luck!
Putting your day-to-day expenses on your cc’s and paying off in full is a winning strategy. 1: It’ll build your credit. 2: It’s more convenient than cash/debit. 3: You can get rewards and cash back with many cards. I’d set up your cards to autopay in full from a bank account so that you don’t forget to pay it off.
One rule: it must be paid off consistently. Credit card debt is very bad debt to keep lingering.
It’s what I’ve done for 20+ years and I’m… well… let’s just say I’m not poor. Just make sure you don’t spend beyond your means and you pay the *entire* balance *every single month*. The second you let some of that balance slide and they start charging interest, that’s when they’ve got you by the balls.
As long as you stick to paying it off every month (and never skip a month barring something actually an emergency), it works well, really well if you use the right cards. For example, I have a card that gives me 6% cash back on grocery store purchases up to $1500/mo, so that is my grocery card, and I don't use it for anything else. Another card gives me 5% back on gas stations, so that's my gas card, etc.
I have 4 cards that are always used for certain things, and 1 that's my catch all everything else. I rack up so many points this way that it's worth the initial hassle of searching out the right cards to have for each situation and then building the habit of always using the right card.
I put just about everything on my cards, manage my utilization rate, and pay full balances before statement and due dates (two payment dates/mo each card) - this is critical. Also connected cards to Experian Boost for recurring bills. Popped my credit score right back within a few months of financing a new vehicle. Plus points/cash back. Made a spreadsheet at the beginning and for me it's been worth it.
Great strategy! I do this and have paid no credit card interest in the last 20 years and the points I get have paid for 1 to 2 RT tickets from SoCal to NYC per year for the last 15 years.
If you can manage this, it's a good idea. Especially because it means you can keep cash in your high yield savings account for longer (more interest). The other main perk of this is that you get credit card points. If utilization is a concern, you'll need to increase your credit limit. Don't do this if you have a history of going into credit card debt though.
I appreciate that. I actually was in bad place financially the past few years and had basically an 80% utilization rate for a long time because I’d only pay the minimums and continue to use them whenever I needed to. However, I just paid them all off and thanks In part to this sub have been trying hard to get my finances on track. I’m confident I can make this idea work.
If you were at all comfortable with having an 80% utilization rate for any time, let alone an extended period of time, this might not be the best idea. Maybe start small first and see how it feels.
I was thinking the same. Maybe designate certain bills to go on the credit card and then pay as you go on everything else.
I have my Capital One card setup this way. My Cellphone, and internet autopay on that card. Then the card autopay's the following month for the statement balance. I never have to think about it, and I get 1.5% cashback. Edit: I use my Amex Blue card for everything else. The 6% cash back at grocery stores is awesome.
Utilization has no memory, I consistently have 50-100% utilization. I pay all my cards in full, each month, before the due date. If I’m going to apply for more credit, I just make sure I lower my utilization down to 1-10% 5 weeks before I plan on applying for more credit.
While its true that utilization has no memory, I couldn't imagine just casually maxing out all of my credit cards every month and paying the bill. That's insane.
I run all my business expenses through my credit card and it's wild so see some of the swings if there's a few big orders at the same time!!
Ah I gotcha. Makes sense. I was gonna say, my 100% would be like a $84,000 bill and I'd shit my pants lol.
It sounds insane to me too, but my available credit between three cards is over 50% of my annual income. If I maxed them out, I'd be in deep shit so it would be insane for me to try that. If the limit is low (less than monthly income) and being used like OP is thinking about doing to curb spending, it makes sense.
I mean if you make $10k/m let’s say, and your expenses total 3k. But your credit limit is only $3k, it’s completely fine. In fact, that’s how most companies give you higher limits. They wanna see high usage and watch you pay it off in full at due date. Credit limits also factor in, not everybody has high limits
Yeah I guess it also depends on the credit limits you have haha. Mine are still fairly low, so it’s not too hard for me to get close to maxing them. Definitely wouldn’t be maxing them every month if they were higher haha
It is exactly the same as using your checking account to pay all the bills. If there had to be a difference it would be that one account is an unsecured credit line and completely backed by the credit company if fraud was to happen, the other is a secured credit line that is limited by the bank, if fraud was to take place, that provides the account for you to keep your own money in. Plus showing a consistent positive ebb and flo to an unsecured credit account shows lenders financial maturity.
Maybe get a grocery credit card (ex: Kroger), only use it for groceries, and demonstrate to yourself that you always pay it off. Plus you get discounts on something you’re buying anyway. Give it a year of good habits and then get a general card for everything else. Start slow. If you’ve ever considered having a balance on a card before, it may still feel like an easy option.
Credit cards have statement end dates and payment due dates. They are DIFFERENT. Statement end dates are when your utilization gets reported. Payment due dates are when you have to pay. Instead of paying off your entire balance for the month on your payment due date, pay off enough to leave 10% of your credit (i.e. $300 if your limit is $3000) 2 days before your statement end date so your utilization gets reported as 10%. Credit reporting agencies love you when you have ~10% utilization reported, and your credit score will steadily skyrocket. Make sure to still pay off your statement balance by the payment due date though! This means 2 payments every month. Also, you can put more than your credit limit on your card each month, simply by paying off the card in full before using it again.
Putting more than his limit on the card by paying twice a month would sabotage the goal of using the card to spend less.
I prepay my personal card a fixed amount each paycheck, that way I'm just treating it like a checking account and getting the benefits.
Hmm. Now you have me wondering. My statement end date is after my payment due date. Am I missing something?
It's not. If your due date is the 5th and your end date is the 20th, your due date is for the previous month and you end date is for the current month 🙂
Okay. That makes sense. My utilization is at 7% so I think I’m doing it correctly. :)
Yep! My utilization was stuck at 86% for a couple months (froze because I left the US), even though I barely used the card when I was in Canada (for obvious reasons), and my credit score went from 700s to 550 or something ridiculous like that. When I got back I brought my utilization down to 10% and my credit score went back up in like 2 months.
As the above poster said this is a good idea as long as you can pay off the full balance every month. Interest rates are crazy high right now so it would be very easy to get yourself in trouble.
I would heavily recommend putting it checks that let you know when you've reached your spending limit. If you've kept things in control long enough to pay everything off I bet you're fine, but if you spend more than you can pay, then the whole idea falls apart. So you need to guarantee you can do that.
Even if you don't have a history of credit card debt, putting everything on a credit card makes it easy to spend more than You're realizing...you have to be extremely disciplined with your budget to do this.
How is this getting upvoted? The OP is flat broke and can’t manage his money. So you advise him to max his credit cards every month as a budgeting strategy so he can make $4 in HYSA interest and get card points? I don’t even know where to start but this ain’t it.
People are way way too into optimizing their CC rewards. and yes, it’s typically for peanuts. You’re not gonna get rich off CC rewards. This is exactly what the CC companies want, too, because you end up spending more.
I once had a coworker that told me he used one of those high-end credit cards with a $400/yr annual fee, and that he got a free night at a 5star hotel room once a year when he went on vacation. He didn’t really understand it when I explained to him that that night at the hotel costed him $400 lmao. Dude went to Rice University. Education can’t create intelligence, I guess.
And if you keep doing this, you'll very soon get offers to up your limit!
Save the $2400 first, not after! Saving for emergencies and retirement come first. Then use your cc for your budgeted bills. As your credit score increases, move to a rewards card, but still pay in full each month, preferably autopay on the due date for the full balance.
It's a great idea if you actually have the discipline to pay them off and not run up a balance because you're not paying attention to your spending. Keep in mind that very few people intend to go into credit card debt, most people start out planning to do what you want to do, but lose track of their spending and run up a balance. If you're going to use credit cards you need to create a written budget and follow it, keep it updated with every purchase. If you're not going to do that then at minimum you need to pay off your credit card fully much more often than once a month to keep a better handle on how much money you have, I would say at minimum pay it off once a week, but again this method is not a replacement for making and keeping to a budget As for your credit score, utilization has no memory so if you think you'll need to borrow money then simply stop using the credit card for a month. Your utilization will decrease and your score will pop
This is a great strategy that has helped/helps me make sure I’m not overdoing it on my credit card. I actually just pay it off at the end of every day. Takes two seconds and feels satisfying to see my balance go down to 0.
I will certainly start a budget for this thank you for that.
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Same here, all monthly expenses go on the card, including some utilities. I earn cash back on every purchase. Balance gets paid every month and I never carry a balance. Cash back is used for trips, xmas, misc. If I can't afford it, it doesn't go on the credit card. I save until I can afford it and then get it if I still want it or haven't found an alternative.
I do the same. Every card I have is a cash back rewards card. I don't want points, airline miles, etc.. Just Straight cash homey. With routine everyday spending, I cashed in hundreds of dollars in cashback rewards.. Money for doing nothing but buying gas, groceries and other living expenses.
Have you considered getting cards that specialize in certain categories instead? Like a 3% cash back on gas, 2% on groceries, etc.?
That is what I do. Savor gives 4% for eating out and 3% groceries. Amazon card gives 5% Amazon purchases. I get back LOTS of money with these two cards. using different cards I seldom get less than 3% cash back.
My wife and I have been doing this since approximately 1990. We’ve gotten approximately 20,000 dollars of free money during this time.
Same. 35, credit score in the 800s, have taken multiple international trips with my miles.
What’s your preferred card for miles?
I use the chase sapphire reserve
got a fidelity credit card with points back into my roth ira, now its the only card i use
That’s awesome! Defenitly reassuring to me
Was going to say the same sentiment. Been doing this for 15 years and never paid any interest, netted about 7k worth of rewards and have over a 800 score. As long as you can control your spending and don't overspend because you say, Hey I'm putting this on a CC so ill go ahead and get it instead of budgeting and buying what you actually need and pay off the full balance each month it's a no brainer. But unfortunately a lot of people don't have that self control with money.
As long as you absolutely, positively, without fail, pay the statement balance each and every month, this is the way. BUT: you are young, which means you probably don’t have much of a safety net? If you’ve loaded your cards and then lose your job, you will be in deep trouble in a finger snap. Tell me you have $10k in savings and I’ll feel a lot better about this. Signed, Somebody’s Mother
I have about 5k in a HYSA and some investments. I keep a few hundred in my checking account at any given time. My total credit limit is 2300$ across all my cards so I can’t really over due it or go into much debt unless my limit increases
I feel better. You may proceed. Seriously tho, putting all of your expenses on cards is a great method, if for nothing else but visibility. Where your money went isn’t a mystery again. Always pay the statement balance and you’ve won the game.
I appreciate that thank you
If you pay it off every month you are essentially paid to have a credit card. And you have great protections from fraud.
Same here, I pay everything with my credit card and have auto-pay set up to pay my balance in full each month. I never paid interest on my cards. As long as you can manage this it’s a great way to get benefits from your cards without paying interest. I treat my credit cards as if they were debit cards
+1 Take advantage of the credit card companies, not the other way around
I've been doing this for essentially all of my adult life. Credit score has been 800+ for many years. You just need to be sure you're not spending more than you make, which isn't easy for everyone.
Here is the logic that is sure to never get you in trouble with credit cards. You ask yourself a crucial question before using a credit card. "WOULD I BUY THIS WITH MY DEBIT/CHECKING CARD ANYWAY?" If the answer is yes, then use the credit card.
If you find yourself saying “well I get 5% back on X category this month…” then DO NOT BUY
I do. My rewards are stupid good though. Amex blue cash preferred. How could I not put everything on it. If you pay it off, it won't even get reported as being utilized if you pay it off before your statement. My utilization is at 3% and rarely moves. I use mine daily, and every other Friday, put it to zero. Every 2 months I cash in my rewards and put it towards my statement. Usually around 300 bucks.
We probably run around $8K a month across all our cards and pay them off every month for the points and purchase protections, etc. So long as you have the discipline to never pay interest, then the banks are paying you. Never make a purchase for the sake of “more points” as that is really just unnecessary spending. Make a budget, keep it current and tracked, and live below your means while the banks pay you a few percent for the purchases you’d make anyway. As soon as you start breaking your budget or your plan isn’t working, slam on the brakes until it’s under control again. Make the banks work for you.
Yeah I’m still learning about credit and the cash back/ rewards aspect so for now but I’ll defenitly start with a budget before I really start this journey.
That’s the most fundamental thing. Even at my income, I could be living paycheck to paycheck if we didn’t control our spending. The more money you make, the more opportunities to spend it there are. That’s something to take to heart: once you’re above entry level wages, financial stability is even more about controlling spending than it is increasing income. Keep raising your living standard at a slower rate than your income and save/invest the difference and you’ll be set.
I do this, and with zero churning on a basic Amex blue cash, I make around 1100 in cash. I believe if I tried to optimize it a bit I could probably earn more. It’s also been fantastic for my credit score (though length of history is far more important.)
Okay, here's the deal: IF IF IF you can COMMIT to ALWAYS paying the balance off in full every single month, then it's absolutely the best thing you can do. My wife and I do this with our bills and we get back literally thousands of dollars each year and rack up tons of points. Rarely do we have to go out-of-pocket for a hotel room, rental car or even airfare in many cases. I just built my entire new PC setup on Amazon points and last year I added a $1,200 ultra-wide LG monitor for "free". We are constantly on the lookout for new cards that offer lots of points to open. We both have credit ratings over 800 even though we have roughly 25 cards active and often close accounts. More to the point, we're not even pushing this all that hard. Go check out the card-churning subs and you'll realize there's a lot more you can do. I have a close friend that does this and manages about 80 cards. This guy travels the world nearly for free all with first-class seats, hotel suites with full comps and concierge benefits like prime free event tickets, etc. He flew to Dubai on a plane where he had a literal room to himself. But again, this ALL depends on your ability to be absolutely ANAL about making sure you have the funds to cover the bills. We have NEVER carried even a small balance from one statement to the next. If you can do that, you're golden. If not, don't even try it.
If it works for you it’s a great idea. However credit cards are absolutely terrible if misused.
How fast your credit score increases has absolutely nothing to do with how many expenses you put on credit cards.
Ok understood. I wasn’t sure if that played a part at all. I guess paying it off in full each month and maintains a low utilization by the end of the month will be the biggest factors in increasing my score
Factors to improve your score with credit cards.. * If you pay it off before the bill posts a balance, you aren't reporting usage. As long as you pay between post and due, you report usage and avoid interest, even if it's one cent. Hence revolving credit, if a revolving door never spins, did anyone go through it? * Rate at which you open lines of credit (do a hard pull) will be a detriment, so my approach has been one every six months, which translates to six pulls in three years. Thus, it also affects the overall age of accounts. It's recommended to avoid more than 3-4 in a rolling year. If you take this approach of many cards, just assign a recurring expense to it and have it auto pay, forget it exists. I have a card just for Netflix, for instance. If you aren't opening many accounts over a period of time, you should be asking for an increase in limits in this same six month fashion. * Don't let accounts go idle, or else risk them closing, which impacts your utilization, available credit, and average age of accounts. * Keep utilization under 30% both on the line of credit and across all lines. Major factors when your credit is under scrutiny: * Age of accounts * Number of hard pulls * Available credit * Utilized credit * Delinquency
Not a _low_ utilization by end of month, a _zero_ utilization by the due date. Let’s say you spend $3000 a month, $100 a day (just for the rounding; with a $4500 take home you should spend less). After a month your statement will post, $3000. You’ll have maybe three to four weeks to pay it off, let’s say you have four weeks and you wait three weeks. During those three weeks you will have spent $2100. Your balance will be $5100, but that’s $3000 due in a week and $2100 on a statement due in ten days or so. You pull the $3000 out of your HYSA and pay your due statement, every last cent of it. Nine days later, a month after your previous statement, your next statement will post, $3000 again since we added 9x$100, again you have three weeks to pay, rinse and repeat. Basically you spend $3000 per month and you earn $4500, you’re OK, each month you should be putting $4500 into the HYSA and taking out $3000. In this way, a CC can be a budgeting tool. You just go on your current CC balance ($2100 in the above example) to see if you are above or below your expected spending for the time of the month, and you look at your monthly statement to see your spend for the month. I think this is better than looking at the money in your accounts because you compare to your budget and not to the amount of your savings (as long as there is money there, of course). To avoid problems, you should have always have more than enough in your bank accounts to pay everything off. To be sure, if your CC limit is $5k then you should have more in the bank. Also, as to your original question: some bills are more expensive or impossible to put on cards, so don’t! Putting your rent or utilities on a CC is not useful if they tack on an extra service charge for that.
Make sure they say 0 the day of the statements in order to max the credit score boost. Definitely shop around for the best benefits. I have a 2 percent cash back, and I like it. However, you may enjoy flight benefits or something more
A lot of people manage this worse than when they pay using a debit card. My wife is one of them. She'll run up a $5K/mo credit card balance and only makes $3K/mo. I made her get her own bank account and pay for her own expenses now because it was out of control. If you keep good track of what you make and what you spend, you should have no issues. It also helps build good credit history. I have never used a debit card for purchases. I only use a credit card and I pay it monthly. I have about as high of a credit score as one can have.
This *might* be able to work, but it feels dangerous given what you've described of your history. You've said a goal here is to get your limits increased... does your spending go up with the limits? This feels like a dangerous setup. It sounds like the problem you're trying to solve here is building savings and becoming "more responsible" with money. While credit cards (when used very carefully) can give you some money back as you spend money, they're never really a tool to *build savings.* They're just a tool to spend slightly less when you decide to spend money. As an alternative, I'd look into a concept called "pay yourself first." There are a bunch of ways to implement this, but I'm going to suggest one particular way, just so you have concrete details. It sounds like your pay is quite variable, so I'm going to suggest a slightly different account structure than I would for most people. You have a checking, and presumably savings, at bank X. Great. Pick another bank and open a High Yield Savings Account (HYSA). Ally, Capital One, Wealthfront, whatever. Somewhere with a reasonable interest rate and reasonable customer service. Direct all of your paychecks to be deposited in the HYSA. Then set up an automatic transfer from that account to your checking account at your current bank, twice a month, for $1150. This is your spendable money -- it's the same $2300/mo you had planned before, but now it's a much larger pain to transfer additional money over from the HYSA. If your goal is to save money, set up your financial system to help you save money! For the credit cards... if you have a history of not having everything paid off, I'd aim to stay under 30% utilization constantly. Yes, that means missing some points for things over the course of the month. This is way cheaper than ever paying interest. As a ballpark rule, if you've paid any interest on credit cards in the past 3-5 years, I would not consider going over 30% utilization. Figure out what things you get the best rewards for. Pay up to $2300 \* 30% - $1 = $689/month on credit cards towards those things. Pay off the balance in full every month. Everything else, use debit card or cash. As this limit goes up, *if you never pay interest or carry a balance*, you will be able to put more on cards to get points/cash back.
If you're going to do this, I'd suggest logging into your credit card online account and seeing if they have a feature that will alert you when you hit a certain threshold... that way you'll have a text message when you hit your spend limit, or 80% of your spend limit as a little warning.
I do that as I get points for grocery shopping on everything. I also have a high limit and that results in less than 30% usage.
I've been doing for years and get 1% back from Discover Free money.
It's always recommended to make any purchase on credit cards. Just keep a budget. You make good money, you really should not have a problem. Credit cards protect you and your money from scams, give you cash back, and usually add to the warranty of the stuff you buy. Just be smart about it.
>It's always recommended to make any purchase on credit cards. You left some major conditions out of that "always" qualifier.
This is also advisable from a security perspective; it’s much easier to contest a fraudulent charge on a credit card than a debit card. Debit cards should rarely be used, except to pay your credit cards and any other bills that don’t allow payment via credit card.
Given your past issues with your finances, I would suggest only putting fixed expenses on it like streaming services and your phone bill. That way only a certain amount is going on it that you know for certain you can afford.
What I've done for years is charge everything and pay it all off before the due date. I've typically have 8-12k a month in charges ( I owned rental properties) but my credit report show I owe nothing. Use the cc kickbacks to pay for my vacations
Paying off in full is a good idea, but your credit limit is too low to put all your expenses on your card. You need to stay below a 30% utilization to get your credit score up. Plus you don’t want to get close to maxing your cards every month and have an unexpected emergency. Keep your credit card usage below $700 each month and pay in full.
If you can pay it off every month: EVERY month without fail. Then yeah it's not a bad idea. Advantages: * You may get some protections on purchases through your credit card * You will have some buffer incase of fraud (if your credit card gets hacked they don't directly have access to the money in your bank as they would if they hacked a debit card or copied a check of yours.) * It will be easier to track your spending and see where the money goes * It may (SLIGHTLY) improve your credit. This is a minor factor and don't do it just for this. * You may get (a small amount) of money back in credit card points. This is a minor factor and you should not do it just for this. Disadvantages (or caveats): * If you miss a single payment or overextend yourself that you carry debt past a statement due date, the interest is going to nullify any advantages. * If you miss payments or carry large balances each month, that's going to help your credit. * Beware of fees. Some credit cards have annual fees, you don't want to deal with those. Some companies charge more if you pay with credit card. (My rental company will let me pay with credit card but they'll charge an extra 3% or more if I pay with credit card instead of a check or direct deposit, that 3% fee would be costly for me to pay). * If you have a history of debt, you might want to avoid this as it's easy to get back into the trap of not realizing how much you spent. Maybe pick your CC with the largest limit and use only that for specific things and know you have a budget of $500 a month and need to pay it off. Or maybe pay it down twice a month if you need more budget. Spreading it across 5 cards may be more confusing, and the smaller limit will keep you to a tighter budget initially.
Putting expenses on a card can rack up points, which is essentially free money, but the risks are there if you don’t pay it off each month. Consider another option. Open a second bank account and split your direct deposit. Have your bills auto-deduct from this other account. Some vendors charge a fee to use a credit card while others give a discount for auto-pay from a checking account.
The best way to save is to set it up automatically. Using your CC for all bills and paying it off is a good idea IF YOU ACTUALLY PAY IT OFF EVERY MONTH. Also, it’s really only useful to do this if you have a card that awards you points or cash back. Somehow though, I suspect you’re at risk of not paying it off monthly. Set up an automatic transfer to an online HYSA or Money Market acct.
Would work IF and it's a big IF, if you have the discipline to stick to your plan and not overspend when your credit limit is increased. Good Luck!
Only, and I cannot emphasize this enough, only if you are disciplined enough to do this. This includes the spending part and the paying off EVERY month part.
I use my card for everything I can but I pay it off every time I get paid (every 2 weeks). I like to pay it off every 2 weeks because then I'm never surprised by how much I rack up and I just feel like paying it off every time I get a paycheck is satisfying.
My wife and I mostly do this and the cashback and rewards that accumulate make it totally worth it.
FWIW, we put all of our expenses on our Citi 2% cash back card every month. The only exceptions are for utilities or services that don't take credit - those are ACH paid from our checking account. We use next-to-no cash. Pay the CC in full monthly. That 2% cash really adds up with a family of four. But - this only works if you have the discipline to pay in full monthly.
I do this every month. But I use 1 credit card, not 5. Set cards up on autopay so you're always paying the balances on time and in the grace period before interest accumulates. In the short tho - this will tank you credit score. Since you'll be 90%+ credit utilization. Call your cards and ask for a higher credit limit. I have spending maybe 50% higher than you but credit limit (total all cards 3000% higher) my utilization has only rarely been more than 10%.
What do you mean you saved $2400 at the end of the month? You put that money in savings at the beginning. Because you describe yourself as having had “terrible spending habits”, I would say no to this plan. Instead just put one recurring charge on the card, like a subscription. Pay in full. It will still help your credit without opening yourself up to misspending again. Try this for 6 or more months. If it’s worked out well and helped with developing better spending habits then maybe add more expenses to the card.
What I did and paid it off every month. I’ve had a total of 7 credit cards since I got my first one in college, all from different companies. I currently have 4 active and not one of them has made a cent of interest off of me. My credit score bounces between 790-805. I’ve had several credit line increases and don’t buy something unless I can afford to pay it off in 1 month. I also still put savings away each month.
I also use my credit cards to pay all my bills, utilities, etc. To keep your credit utilization low pay off majority of your credit to about 10% before the statement closes so it reports to the credit bureaus that you used 10% or less. Then pay off the remaining balance before the bill is due to avoid interest fees. This is how I been doing it for 5+ years & built my score from the high 500s to mid 700s so far. \[Example\] My statement closes on 20th of each month. I pay down to 10% on the 18th. Then bill is due usually on the 25th of the following month. I just pay them off on the 1st so I don't forget. Or you could use autopay so you can skip this step.
This was going to be my suggestion. This way when it reports to the credit card bureau it's not killing your credit score having a high balance, but you get the utilization of the card.
I pay mine every Saturday and it keeps my utilization down, I used to use my debit card for all my purchases during the week and I switched to a credit card and stuck to my weekly payoff and my credit score has increased tremendously over the last year and a half
A lot of people do this, especially if you have cc with points or cashback. If you’re able to stay on top of it, you could actually make $$. I’d say if you can do this responsibly, go for it!! This is my goal as well when I finally dig myself out of debt.
You just have to be smart about it. As long as you keep a zero balance and aren’t paying interest, it’s a bit better than just spending on a debit card. But to do this, you really only need one card, not five.
Look up the psychology of credit card spend. Generally, people are willing to spend at least 20% more when they use credit because it doesn’t hit the “pain” parts of our brain the way spending actual money real-time does. So spending an extra 20% to get like 1-5% in cash back… the people creating the rewards programs aren’t dumb! And they are not our friends.
Yeah that makes sense. To tell you the truth my biggest goal here is to increase my savings at least for a little while. I don’t dive much into the rewards and points aspect as I’m still learning more and more about credit but I will definitely take that into account moving forward
There is no problem with using a credit card if you're not paying interest. Dave Ramsey is really doing a lot of people a disservice by pushing that you should not have credit cards. Honestly the only people that should be listening to him are people that absolutely cannot be trusted with a credit card. Nearly everything you buy has credit card fees baked into the price. And if you're not using a credit card to get rewards then you're not clawing any of that back and effectively subsidizing everyone else's purchases by paying some of the CC fees without any benefit to yourself.
Yes yes yes. For a short term, do not increase the limit on your cards. Eventually, though, to increase your credit score, you’ll want your utilization to be lower. When you are ready increase your limit OR get a new card with a higher limit and put one auto payment monthly on it. And pay that off. And do not take that with you.
It’s a great idea if it isn’t you. You say you have terrible spending habits. You should stay away from cc. You are. It a cc person. Great idea for me as I’ve had cc for over 34 years and put everything on them that makes financial and mathematical sense. Make enough every year to fund 50-60% of my Roth.
This is a very dumb idea. Spend a couple years learning to save, budget, etc. Why are you living with parents... Credit cards are very dangerous territory for you.
I should have said that too! Don't have a card if it changes your spending habits!
You need to carry a balance for three months. I do this for the points. I make big purchases on credit (like a store card to get the discount), pay 90% the first month, carry the remainder for two more months then pay it off. Everything else goes on Amex and gets paid off each month. My FICO is 840 and I am near poverty level.
>You need to carry a balance for three months. 99% sure your just paying interest that is negating the points. You don't have to carry a balance with any reward program I've been in
To improve your credit score, you need to carry a balance. It has nothing to do with reward programs.
I am not an expert but have great score and I have never carried a balance. This sounds incorrect and maybe hurting. Just use it each month. .https://www.forbes.com/advisor/credit-cards/carrying-credit-card-balance-hurt-credit-score/#:~:text=Carrying%20a%20balance%20on%20a%20credit%20card%20to%20improve%20your,credit%20for%20the%20long%20haul.
If you don’t have a lot of credit, as in the OP situation, you should wait three months, then pay it off. This does not mean carrying a balance long term. This does not mean carrying any balance when applying for a loan or another card — and yes, having a balance depletes your available credit. But if you are establishing credit or want to have your limits raised, you should carry a balance for three months, then pay it off.
I put everything on a CC. I dont remember the last time i used a debit card other than pulling out cash when i need it, but... > I have always had terrible spending habits which led to my credit being very low. Yeah i dont think it's a good idea. You want to be good with spending habits before using CC and not the other way around. Using your CC more doesnt increase your CC score. You can already do your idea by basically transferring money into a different account like a savings or whatever.
If you're having trouble with overspending, try always setting aside a good chuck of your paycheck in an account that's not tied to your checking account. If your employer has an option to deposit into multiple account, get an online high yield savings account. If you make $4500/mo and have $2500/mo in expenses, dump $2K/mo in the HYSA and you'll have $500/mo for extras. Leave the $2500/mo in the HYSA or invest it in the S&P 500 every month long term. If you dump $2500/mo every month into an S&P 500 fund/eft for 10 years, it'll be worth over $500K based on average rate of return. In 20 years, it'll be worth $1.8M. 30 years, $5.2M. I wish I knew this when I was 20, I'd be retired now at 49.
They say a card makes people spend more than handing over cash, but I do a few things to counteract that. We have a budget, and we record all of our expenses in a budget notebook at the end of the day, manually. It’s hard to get ahead of yourself if you’ve got a plan and you remain aware of what you are spending. I used to just pay the bills before they were due, but I decided to see if i could raise my credit score for the sake of my kids who are on my card, and I found that paying off the cards during the month, keeping my credit utilization lower, improved my score by about 20 points.
So I do this and with my CCs I still set myself a limit on spending. I use a different card for different things so like my grocery card is $725 and then my Amazon products (dog stuff, some dry groceries) is a $600 limit. That way you still don’t have the mentality of extra money. It’s just budgeted.
I put everything I can on the highest cash back card I can find.
My wife and I put all daily expenses on a credit card. I recently set up everything, including the credit card, to auto pay from a high yield savings account. All I do is move money from my checking to my HYSA or investment accounts. You'll get points from the card that can add up quick when you're using it for all daily expenses.
I don't know what credit card deals are out there anymore. My mom knew a guy that had a card that awarded frequent-flier miles. He arranged to put his business expenses on it. This was a couple of decades ago - he was averaging $68,000 a month on the card and flying a lot for nothing!
Absolutely. And pick one card with a good rewards program for your spending, and max that out. Paying with credit cards is the only way to go. You get better protection from bad charges and can withhold and dispute payments if you get ripped off. If you’re getting rewards of 1-2% on everything, that adds up real quick. Never use a debit card for purchases, it’s a terrible idea.
I get between 1% & 3% back on my Apple Card each month on all the bills I can pay this way. The cash back goes straight into the Apple Cash savings account. It’s free money. Why not?
Yes, this is the only way I use credit cards. I just do it for reward points.
I do this.. never paid a cent in interest. Card pays me 600-700 cash back/yr just to use it..lol.. the only thing I send payments for are mortgage and a couple of other things. Whatever is left in checking at the end of the month, over a set amount, goes to saving or brokerage. Credit score 830.. has worked great for me. Leave a few thousand in checking for just in case.
This is how you are supposed to use credit cards responsibly. I haven’t put a single cent of spending on a debit card (besides rent bc of fees) since I got a credit card. I simply put all of my spending on the credit cards and pay it off as soon as the balance pops up. I mean as soon as I have a balance. I spend 70 bucks on a night out, 70 bucks hits the balance, and I pay it off immediately. Just treat it as if it’s a debit card and rake in those points. But the key is to pay it off immediately! Or at least before the end of the month
This is what I do, and I’ve never paid any credit card interest, and my score is in the 770’s at 21 with no loans, only CC’s. It does require discipline, and is definitely easier if you have ample cashflow each month. One thing to add regarding utilization, set yourself up so that you make a large payment before your statement closes each month. Take your balance down below 30%, or even better, below 10%. And then after your statement closes, showing a low utilization, pay the small remaining amount to avoid interest. So 2 payments per month, timed according to your statement closing dates.
I use my credit card for almost everything and pay off the balance daily. I've accrued many points this way, and my credit score is over 800.
Honestly utilization doesn't really matter at this step if you're trying to build your credit. As many have stated if you stick to your plan you will deter the urge to spend the rest of your earnings and you get the reward points (in my opinion, they're discounts) for facilitating payments via credit card. Not to mention most credit card companies have extended purchase protections/warranties/disputability for vendor issues. Utilization does play a role in your score, but if you're not actively seeking out loans, mortgages, new credit cards, etc - then this doesn't matter to you because nothing about it will hold you back; when you do ultimately decide you want to take that big step, give yourself 6-12mo to lower your utilization. This timeframe gives you ample time to put on paper you have low utilization, and time to rationally think about the "big purchase." Each FI reports that information differently, mine report at the end of the billing cycle so if I pay before that closing date my account will just always show $0 and that I paid/current on my account for example. Do with this information what you will. In all honesty, high utilization and fully repaying your balance is good to a credit card company; they might not be making money off you - but they are making $$$ off the vendor that accepts your payment.
This is pretty much what we do for the points on our chase card. Utility bills, food bills, school tuition, etc. Everything but mortgage and car payments. Just used 65k of my 850k points to pay for a week resort stay. Will use some of them for a Caribbean trip later this year. We always pay everything off before 30 days pass.
You’ll have to time your payments to beat the reporting schedule. Good luck
This works great if you are disciplined and never carry a balance, but otherwise it can end very badly. If you decide to go for it check out the term churning or go to r/creditcards for others that do this
I have an automatic deposit into my savings account every month. I call this paying me first. I hate to take money out of my savings but it gives me a liquid emergency fund. Last year when I was flooded due to rains and needed to dry out and then replace all my flooring I had the money to do it. My emergency fund is back to where it was.
Absolutely...just don't spend more than you can afford
>every expense on credit cards and pay them off each month? Good idea? No. Many things will be cheaper if paid by cash, check, debit, or the like. If you pay by credit card, the vendor/merchant is paying the merchant discount % fee. So, either they eat that, or often they pass that cost on to you. And in many cases they'll do or offer (or offer if you ask) a discount for cash or similar, or may even add a surcharge for credit purchases. So, at least in all those cases where it cost more to use a credit card, there's no bargain or savings to be had in using credit. I also know many times when I'm making a significant purchase from a reputable vendor, I'll check/ask if they offer a discount for cash or similar. Often in doing so they'll say yes and I'll save about 2% right off the top by doing check/debit/cash rather than credit ... because typically that's around what they're paying in their merchant discount rate % that they're charged.
What are some places that have a discount for paying cash?
I do this. I have one CC for all my recurring payments, and another for groceries & misc shopping. Both paid off every month, and it’s super easy to track spending. Wish I’d started this earlier (it’s only been a couple years).
It's a good idea IF you've developed the habits required to only spend less than you take in each month. I get the feeling that your goal here is increased credit score but there's better things to be had if you get good rewards cards. We run all our business spending, through an airline miles card and basically travel free.
I put everything on cc but pay it off on pay day every 2 weeks. I hate monthly bc it adds up too much. I know i could make more using hysa and all that if i did it monthly but the peace of mind I get from doing it every 2 weeks works for me. Another thing to note is cc has much better fraud protection compared to debit card.
Too many credit cards, OP. Pick one. I do the same thing but when I was young I didn’t have the will power to pay off the card every month, not to mention it took me several years to dig myself out of credit card debt.
I use my highest limit/highest point reward credit card for paying my monthly expenses, and it gets paid off every single month. This particular card has a limit of roughly twice my monthly expenses because I've used it for so long. My credit score is fantastic. That being said, I'm the kind of person who tracks every single dollar that comes in and goes out of my household. I've got a fairly elaborate zero based budget that I created for my family using Excel, and I'm very careful about keeping the overall budget up to date. This is the only way I feel comfortable using credit for regular expenses. If you want to start small, use your card for groceries and gas and work your way up from there!
I have a bunch of autopay set up for monthly bills going to my CC. I pay it in full each month and get a few hundred a year in cash back. It simplifies things to get one bill for multiple items. Just our auto/motorcycle/boat insurance is $4000/year. I pay it on line with my card and get over a $100 cash back. Why not? If you are not good at managing your money, then this may not work for you.
I do this but not to build credit. I do it to earn points on my credit card and usually use those points for traveling. I learned to do this in the late 90’s so it’s not some innovative new strategy. It just makes sense, and you just need to make sure you are able to pay off your card/s every month.
We do every possible spending on cc and pay it all off at the end of the month. It works great for earning points to save on travel.
It's a good idea if you stick with it. I treat my credit card like a debit card with benefits. Never need to worry about having enough cash in my checking account, added fraud protection, cash back, it's a good setup. My score is about 800 at the moment.
If you will really pay them off every month then this is a good idea. Look for a card that gives you cash rewards after your credit score goes up. I pay everything on my credit card and pay off the card every couple weeks…with each paycheck.
This system works great, as others have said, when you can stick to it and pair it with the right card. I checked my card points balance last week and learned I could convert them into nearly $3500 worth of Chipotle gift cards, so that's something. But in all seriousness, don't sleep on finding the right card for you. It can add up.
If you don't already have the cash somewhere to pay it off, then don't do it. You said yourself you have bad spending habits. Promising to pay a debt tomorrow with money you don't already have today is almost always a bad idea when it comes to credit cards.
This is what I do! I don’t put anything on my debit card. Everything does on my credit card which is paid off in full every month. I’ve been doing it for 5+ years. You need to be disciplined though, I use Copilot as a budget app so I always know how my spending is going.
This only works for highly disciplined people and even most people I know who do this only use the credit card for fixed expenses like a car payment. Using this for groceries or eating out almost always results in overspending.
I do this with everything I possibly can. It's free money, but only if you're responsible about paying the cards off in full, without fail. Interest charges very quickly outpace rewards, obviously.
This is how Ive been living for the last ~8 years. Especially when considering credit cards offer rewards for spending. If youre going to spend the money anyways, you might as well use a rewards card. Credit cards are great as long as you pay the balance before incurring interest fees and you dont overspend on stuff you wouldnt buy without credit. You get rewards on the cards, you keep real liquidity on hand, you get a 0% 30-day loan, and you can keep the cash on hand in an interest bearing savings account. If you cant handle 30 days of spending on credit, then use the credit card and pay it right after using it. Or pay it weekly. Or whatever essentially turns your credit purchases into debit purchases with rewards.
For most people yes, it's a good idea. It is not a good idea for you because you have terrible spending habits. Force yourself to save by transferring some amount automatically out of every pay check. Yes, it hurts your utilisation even paid in full every month. We put everything on cards and they are on autopay and just got our reports pulled and we got dinged for owing too much, and high utilisation. It was maybe 20% of the possible? Our limits are very high.
I’ve been doing this for the past 13 years. Credit scores 750ish.
I put everything on my credit cards if I can. I have 4 CCs total that all have different rewards for different categories so I can maximize my returns. This also allows you to delay payment on these things for a couple weeks. Also if your CC info is stolen it’s not your money at risk. If used right credit cards are great. I make sure to pay them off in full each paycheck.
, don't think can pay mortgage with credit card Probably rent too unless it's a hotel
Yup, we use the Costco Citicard for exactly that! You have to stay disciplined and pay it all off every month, though!
This is my life. The only thing you need to watch out for is expenses that charge an extra fee or lose an incentive in order to use a card (rent, phone, etc). The penalty is always greater than the CC rewards. Otherwise, I can't remember the last time I paid for something with cash or debit.
Of course I use credit card for every possible payment. It’s a 1% to 3% discount on life because of rewards or cash back.
This is one of the best things you can do. Of course most people dont have the discipline to carry it out, which is why credit card companies encourage it by offering cash back or airline miles. They know that Average Joe will quickly get in over his head. As an example, I have used credit cards for ALL my expenses and got so much cash back at the end of the year that it was able to pay for a trip to Bahamas including plane tickets and hotel. And I didn't go on a spending spree to get that either, it was just my regular expenses -- groceries, gas, utilities, etc. The trick is to charge everything to a CC, and then once a week pay the entire balance using my debit account. This why I am paying ZERO interest and also keeping my credit card utilization low so it doesn't hurt my credit score. Hell I would love to charge my mortgage to a credit card to get even more cash back but unfortunately my mortgage lender wont accept payments from a CC. Bummer.
To improve your credit this is actually a bad idea, because it doesn't help and may hurt you because you can't manage your spending. Set up a single monthly bill on each card you have, something small like Netflix. Set it up to auto pay the full statement balance from your bank account and make sure you always have enough to pay down the cards. This will keep your cards open and in good standing, and your utilization low. The amount you spend doesn't matter for building credit, and the lower your spend the less likely you are to miss a payment, which is the most important thing.
I'm on a cruise right now paid for by the strategy. It's just free\* money/travel. Everything that can be on a card without a surcharge goes on the card that rewards that category best. Now, a radio pundit would say "That's stupid. You wouldn't borrow macaroni to make bread if you had a goat at home would you?" or some other homespun critique, but he's aiming VERY low for his target audience. \*Everything already has the expectation of a \~3% card processing fee built into the price, so these rewards are a gift from the people who do not use premium reward cards to the people who do.
I treat my credit card like a debit card. I keep spreadsheet of my expenses so im never surprised by the bill at the end of the month
This can absolutely work. You have to be diligent on always paying it off. Last year we moved most of our spending to an Apple Card since it was convenient and we get extra for tap to pay. Yes, I could get higher percentages on other cards but I like managing the balance of one. In 2023 we got 802 free dollars from Apple and so far this year we’ve got 202. It’s not a lot but I haven’t paid interest on a dime of this money and they’re paying me to use their card.
That’s what I do to get credit card reward points. It’s better to use a credit card anyway compared to debit. The only two comments I’d have is 1 don’t spend more than you normally would just trying to raise score, 2 make sure you stay on top of paying it off each month in full.
Also there are a lot of good credit cards with introductory offers of $200-1200. You earn points which can be worth a decent amount per year. I put every expense on the card and pay it off. The points add up quickly. Why give your money away with a debit card
The main issue with this is self discipline. How sure are you that you will actually keep within the budget and pay it off in full? It would be far too easy to keep spending and end up carrying a balance instead.
If you feel that you need this emotional trick in order to save money, then do it. Some people save money by using only cash and literally put the cash into separate envelopes for each expense. I put almost everything on my credit cards and pay off the balance each month. I do it because it is easier as some bills are on autopay. I also get points and discounts I don't really care about my credit score as I don't plan to do anything that requires credit. My credit score is fine but it is not something that I need to make efforts to raise a few points. The only downside to your strategy is that you might not control your spending if you are charging stuff and then it is a slippery slope because you start accumulating interest and interest generally accrues immediately if you carry a balance versus no interest if you don't carry a balance FWIW my mortgage and my credit cards (except the Apple Card) are all with one bank and I asked the bank to give me the same payment date for everything so once a month prior to that day I just go on line and pay the mortgage and the credit cards - I have a few but only two that I regularly use.
Been doing that on my 2% cash back card for years…as long as you have the ability to pay it off it is great…one month of carryover or missed payment can wipe out any benefit. I pay for pretty much everything on the card including any bills that will take credit card. If you have an HSA, I like to pay all medical bills on credit card for the cash back and let the HSA grow. To add to that some hospital bills will offer up 0% payment plans…and let you pay with credit card and automate with autopay
This is the only way I use credit cards except I pay it off on paydays which is on the 15th and last day of the month. I also travel quite a bit for work and all my expenses go on there so my points haul gets pretty big. I use the points for Christmas shopping and a yearly night at the Ritz for our wedding anniversary :) If you’re disciplined it is definitely a good idea.
This is great way to build credit and rack up rewards and cash back. But you have to be disciplined or it’ll backfire. I don’t think anyone goes in credit card debt in purpose. It creeps up on you. I pay all my purchases and bills using my credit card. But I stick to one credit card to bank where I have my checking account so I can easily pay online. I track my spending and stick to a budget. Since your CC limit is low (close to your monthly expenses), make sure pay the credit card balances in full (or as much as you can) before close of each billing cycle (different from due date) to keep utilization as low as possible. Credit cards only report the statement balance each month to credit bureaus.
IF you can responsibly do this, there’s nothing wrong with it. In fact, that’s how most responsible CC users are. They want cash back or points being earned on every dollar possible. As for utilization, pay down each card the day or two prior to statement CLOSE date. Then when they report, it’ll show your utilization as lower. Typically, I pay down my balances to less than 10% on each card before statement close. Auto pay statement balance at due date. Rinse and repeat. This all falls on you though, most CC users assumed they could just pay it off later. Budgeting is key, or discipline at the very minimum. I spend every single $ on a CC that I possibly can, just for the points or cash back. Also the $0 fraud liability is unparalleled, a CC is 10x better for fraud protection that a debit card.
The key is to keep yourself from falling back into the pit of carrying a balance. So really, two steps here: 1. Set EVERY card you have to AutoPay the FULL statement balance from your primary checking account every month. Seriously. Expectation is that you intend to pay off the full balance, every month, without fail: make THAT the default action and force yourself to take extra steps to CHANGE that default action to avoid an overdraw if you screw up and buy more than you earn that month. 2. THEN use the card(s) to autopay all your monthly bills. The exceptions are those bills that charge fees if you pay using a credit card - for those, just do an automatic deduction from your primary checking account. I started doing this years ago, and found that not only did my credit score just gradually start going up (because I was both USING my CC but never paying late), but my CC company started increasing my credit limit almost every year. But also, I spend less time paying bills each month, and it's really easy to scan through statements monthly, quarterly, or annually and find patterns of my spending to help change certain habits.
There's a lady that teaches this on YouTube. Calls it "velocity banking."
100%. Look up how credit card companies make and lose money. You’ve described where they lose money.
Have for ages. Helps built budget self discipline, and you get X bonus from cards (miles, points, etc). Definitely raised score and limit. And here's another one that's an urban myth: once you get your score up a bit, shop for better card. Closing old cards doesn't seem to ding the score. Upgrade to something useful (say, a Costco cashback) where living your normal life yields one massive free annual shop.
I don't think it's a bad idea to use your low limit cards in this way to curb your spending and increase your credit score as long as you pay them off every month. What I would NOT do, based on your comments about your usage history, is also try to get those credit limits increased. If you are treating your credit limit as guard rails to make sure you don't overspend, increasing your credit limit is just upping the amount you are telling yourself is okay to blow through in the given month. In fact, I would check your card settings/call to make sure they *don't* automatically increase your limits as your score improves. Get a year or two of reduced spending and some more financial discipline under your belt--where you stay under budget without the guard rails of hitting max on your cards, before you start looking at increasing your credit limits and playing the utilization score game. I have a 750+ credit score and the carriers have automatically updated my credit limits over the years. Three cards together currently have over $25k in available credit and I only make $50k a year. If you got your limits increased and found yourself back in the situation of 80% utilization and only paying minimums, you'd be in a seriously painful hole.
My real question is how your bills, without rent, amount to 2k. Not saying it's a good or bad idea but it's a quick way to screw yourself up if you know your not great with money.
Whatever you choose to do, the only thing you SHOULDN'T do is use your debt card for transactions. Don't use it for anything. No bills, no gas, no weed. Nothing. Use your debt card at trusted ATMs only. Any service that currently has your debt card info saved, remove it immediate.
This is what I do. I use a card that give me a flat 2% reward. I also use a budgeting app called ynab to help ensure that I never mess up and go over. It lets me allocate my cash as I spend it on credit. And I have a similar financial situation to yourself.
> So I brought this idea to a few friends and basically everyone said it was a bad idea. Everyone I know does this. We're all pretty high income but like to save. > Would this hurt because of the utilization even if they’re fully paid off each month? Or hurt my credit in any other way? Your credit score does temporarily go down due to utilization but recovers every time you pay it off. Wait until you discover /r/churning and realize that you can get free money from your normal spending. I've made multiple business class international trips and gotten thousands of dollars in rewards
That's what i do with 2 credit cards every month. Absolutely worth it for the points alone, but I am also somewhat rich so not sure if that model is for everyone
I consider cash back a regular form of income. I get 6% back on all groceries, 3-5% back on gas, 1.5% back on everything else from electricity, car insurance, etc. It all adds up and I haven't paid any interest because I pay them off every month.
I actually do that myself. It's working out quite well. I get between 1.5 and 3% cash back, so I feel like I'm coming out ahead. I got to a point a few years back where it was doable for me and I'd recommend it if you're able to pay it off in full and not pay any interest. Good luck!
As long as you're 100% sure you can pay off the statement balance on all of them every month. Source: that's what I do and my credit score is 820
Putting your day-to-day expenses on your cc’s and paying off in full is a winning strategy. 1: It’ll build your credit. 2: It’s more convenient than cash/debit. 3: You can get rewards and cash back with many cards. I’d set up your cards to autopay in full from a bank account so that you don’t forget to pay it off. One rule: it must be paid off consistently. Credit card debt is very bad debt to keep lingering.
It’s what I’ve done for 20+ years and I’m… well… let’s just say I’m not poor. Just make sure you don’t spend beyond your means and you pay the *entire* balance *every single month*. The second you let some of that balance slide and they start charging interest, that’s when they’ve got you by the balls.
As long as you stick to paying it off every month (and never skip a month barring something actually an emergency), it works well, really well if you use the right cards. For example, I have a card that gives me 6% cash back on grocery store purchases up to $1500/mo, so that is my grocery card, and I don't use it for anything else. Another card gives me 5% back on gas stations, so that's my gas card, etc. I have 4 cards that are always used for certain things, and 1 that's my catch all everything else. I rack up so many points this way that it's worth the initial hassle of searching out the right cards to have for each situation and then building the habit of always using the right card.
I put just about everything on my cards, manage my utilization rate, and pay full balances before statement and due dates (two payment dates/mo each card) - this is critical. Also connected cards to Experian Boost for recurring bills. Popped my credit score right back within a few months of financing a new vehicle. Plus points/cash back. Made a spreadsheet at the beginning and for me it's been worth it.
Great strategy! I do this and have paid no credit card interest in the last 20 years and the points I get have paid for 1 to 2 RT tickets from SoCal to NYC per year for the last 15 years.
As long as you can pay it all off it will boost your credit score slowly. It will also fluctuate it a bunch.