Credit Card Budget ? Yes, No or ... What?

[Uborrow-Upay]

I was in a conversation the other night with a guy who was planning on making a major purchase using his credit card.  Long story short, he figures if he can swing the minimum payment, in addition to his other bills, he can afford it. 

Which got me to thinking. 

I'm wondering how, or even if, other people budget their credit card charges, before they make them.

Just curious (if this has been covered in the past, sorry!). 

Thanks! 

[dharalex]

I do! I live a pseudo Dave Ramsey lifestyle. I make sure I have 100% of the money to make the purchase, then I charge it, then I immediately pay it off so I can earn cash back or points, build my credit, but stay out of debt. And I limit monthly how much I can spend so that I can always make the entire payment. You cant get everything all the time, but it keeps you out of trouble.

[Anonymous]

These days I'll typically only charge something if I have the cash to pay right away.  If I don't have the cash, but I absolutely need to make the purchase (like new tires and tuition right now)  I'll plan out how soon I can pay it off and figure out which card the charges should go on depending on APR and %rewards.

Just a few weeks ago (before I found this wonderful place!)  I was the kind of person who would think to myself "Well, I can pay for this in 3 pay checks, so I'll just buy it and pay later."  Well, I get paid every 2 weeks so even though it's only 3 paychecks, it would actually take 6 weeks to pay down the balance.  It was a really bad habit and thankfully I stopped doing it before it got me into any trouble.

[tinuviel]

I used to be like your friend and think that all was well and good so long as I could stretch out payments over time. I don't do that anymore. It took me far too long to get out of debt and I have no desire to go back into it.

These days, I use my CCs to make my normal monthly purchases, things that are in my household budget and that I would be buying regardless of how I tender payment. But by using the CCs, I get to earn rewards. I then pay off my charges as I go, generally once or twice a week. This allows me to use my cards without racking up large monthly bills. Mentally, it's just easier for me to deal with it this way. I realize that other folks may be different, and would prefer to just pay one large bill per card every month.

The only card that I pay off only once a month is my Amex Green. Since it reports high balance, rather than a CL, I want to show that I've actually spent a decent amount with it. However, since I've only had it a few months, I'm increasing my spending on it slowly and gently. Nevertheless, the entire amount that I put on it for the month is covered by my normal spending budget, and the funds are readily available to pay it as soon as the statement cuts.

Interesting thread! I look forward to reading about other's methods and their reasons for doing so.

[andre181]

I make it a rule that I only charge something if I know I can pay it off in within 2 months, but I almost never take 2 months to pay it. I usually PIF.

[suzook1]

the wake up should be the newer bits of info more card companies are including which shows you how long it takes to pay your card off with just the minimum vs an accelerated. I think if more and more people actually took the time to understand that and realized how much something actually cost after interest they would be less inclined to just make the minimum

My dad always says what bank is going to give you 10 to 30 percent interest on your money...no where which is why he hasnt paid one dime of interest in 37 years (no joke)

[Anonymous]

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@aleicgrant wrote:

the wake up should be the newer bits of info more card companies are including which shows you how long it takes to pay your card off with just the minimum vs an accelerated. I think if more and more people actually took the time to understand that and realized how much something actually cost after interest they would be less inclined to just make the minimum

My dad always says what bank is going to give you 10 to 30 percent interest on your money...no where which is why he hasnt paid one dime of interest in 37 years (no joke)

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It sure would be nice to get 10-30% interest on a savings account

[thom02099]

Only time I'll take advantage of the "extended payments" is for home remodeling projects (which I'm doing now) and can charge on my Home Depot card and extend no interest payments for XX number of months (currently 12 months on purchases of $299 or more).  In fact, I have the cash to pay it off, but I'm going to take advantage of the extension of payments, will show that I'm utilizing my credit, but not getting my UTI above a safe limit (under 30%). Otherwise, it's PIF weekly.  Just gotta change my mindset from that of writing checks for purchases, to using my cards wisely and making my payments in a timely manner. 

[barbaralee]

I use to be like your friend. Then I changed my whole outlook on finances and have not looked back. Now I do charge every purchase I make on a cc and then PIF. I rarely (almost never) use my debit card only because I hate deducting everything from the register. Such a nusance. So much easier to charge, pay the card, and only report the one payment to my register. I hate carrying a balance. My SO is having to carry a balance for the first time in his credit life for the next couple of months and it's been kind of a mental struggle for both of us. But it's a small balance (just shy of $1000) and as long as that is PIF in the next two months I'll be happy.

I was on the phone with someone today and they reminded me of the ol' days of carrying a balance and struggling to make minimums. I hope to never be in that position again.

[missji]

I budget my monthly expenses, pay for expenses with credit card (when/where possible) and pay the card in full each month before the statement period closes.