Friday, December 3

Why You Should Have All Expenses on Your Credit Card | Bitcoin Portal

You may have heard advice about avoiding credit cards and paying everything in debit or cash, as it is very easy to lose control using a credit card. But this method of payment, used correctly, can be your greatest ally in financial control and budget optimization.

Do you believe the card is the villain or something negative for your finances? Maybe you’re not enjoying all the benefits it can offer.

When we lose control using the credit card, the problem is not the card. Paying only with cash and spending everything on the debt, with the thought “I’ll use it until I run out of money”, this is also not having control.

The best way to get financial life on track is to keep a budget and set a spending limit for each category of expense at the beginning of each month, after allocating some investment money.

It’s difficult at first, but during the first few months you’ll figure out how much you need to set aside for each expense category and make adjustments over that period. The credit card is a tool for budget optimization.

3 reasons to spend all possible expenses on your credit card

Reason number 1: facilitates financial and budget control

Many people find it boring and complicated to write down expenses, but it is important to know your consumption habits. Knowing where your money is going and especially building the budget.

When we pay our expenses by credit card, everything is automatically noted on the monthly bill, making this control much easier. Some cards already automatically categorize expenses into editable categories and show you interactive expense graphs.

Even if your card doesn’t have this functionality, there are plenty of apps on the market that do it for you. Another option would be through spreadsheets, as all cards and banks provide the invoice in Excel format.

Reason number 2: postpone the payment time, earning income on the money invested.

Many people believe that the credit card is used to buy goods they want, but do not have the money to buy, but with the exception of basic necessities, such as replacing a broken refrigerator and investing in something that will generate income, the card Credit cards should only be used to buy things you already have the money to pay for.

We should only use the credit card to delay payment and keep the money invested, so as not to run the risk of getting into debt.

Do not use your credit card to anticipate dreams, it is important to have a plan to make your dreams come true and use your credit card only as a tool to optimize your planning.

Reason number 3: main reason to spend all expenses on credit card. The possibility of “cashback”.

Did you know that a portion of everything you spend on your credit card can come back in the form of cash? Most credit cards generate points in loyalty programs, which in turn can be redeemed for airline miles.

Most people already know that points turn into miles, but a lot of people don’t know that miles don’t necessarily have to turn into airline tickets, they can be sold and converted into cash. This possibility of turning credit card expenses into cash is called “cashback”.

What is the value of “cashback”? It depends on which card you use and how many points it generates. The amount can be up to 2% of all your charges paid by credit card.

It’s worth the exercise of adding up all your expenses that you can pay on your credit card and checking how much would be 2% on top of the total amount. This is the amount you are not receiving because you believe that the card is the villain of finance.

About the author

Marina Luz, CFP®, is an economist with 8 years of experience in the financial market and worked at Itaú BBA. He specializes in personal finance and maintains the YouTube channel More Money, on financial education and investments

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