9 Ways a Credit Card Can Help You Set a Budget - And Stick to It

Credit cards can be helpful budgeting tools, but only if you use them correctly. Find out how they can help you budget.
Updated May 13, 2024
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At first glance, credit cards and budgets don’t seem to be a likely duo. But when you break down what a credit card can do, it’s easy to see how it can be an important financial resource when you’re budgeting. Tracking your spending is one of many smart money moves you can make with a credit card that coincides with sticking to a budget.

In addition, if you really want to move beyond living paycheck to paycheck, earning credit card rewards is like saving money on every purchase you make. For help using credit cards in your budgeting strategy, consider these methods.

9 ways a credit card can help with budgeting

Tracking spending by category

If you want to set a budget and stick to it, it’s important to know what you’re spending money on. Credit cards make this easy by giving you direct access to all your credit card transactions. You get to see exactly how much money you’re spending and what you’re spending it on.

Even better, many credit card issuers provide you with ways to filter your spending by category in your online account. This can help you know which categories you tend to spend more in. If you find you’re spending a lot on eating out, you can adjust your budget accordingly. Or you can use a credit card that earns rewards for purchases in your high-spend categories to help offset costs.

For example, it could make sense to use the Blue Cash Preferred® Card from American Express if you’re buying a lot of groceries. And for takeout and delivery purchases, the Chase Freedom Flex℠ is an ideal option.

Learn more in our full Amex Blue Cash Preferred Card review.

Using cashback rewards to pad your budget

Credit cards are often associated with debt, but earning rewards with a credit card can help you stay on track with your budget. This is best done when you align a credit card with your specific lifestyle and spending habits. As mentioned above, certain cards may have better earning rates for purchases in certain categories. So if you frequently visit the gas station, a credit card like the Costco Anywhere Visa® Card by Citi, which earns rewards for eligible gas purchases, could be helpful.

Many cashback credit cards function similarly. You can use a card with specific earning potential according to your purchases or get a general cashback card like the Citi Double Cash® Card to earn 2% on every purchase with unlimited 1% cash back when you buy, plus an additional 1% as you pay for those purchases; plus, for a limited time, earn 5% total cash back on hotel, car rentals and attractions booked on the Citi Travel℠ portal through 12/31/24. But remember, you want to use credit cards for purchases you already plan to make.

Doing so will help you ensure you’re spending only the money you need to spend while earning cash back at the same time. The cash back you earn acts as a discount on all your purchases, so it might help stretch your budget. Take a look at our list of the best cash back credit cards for more details.

Read our full Citi Double Cash® Card review.

Using travel rewards to hit savings goals

The best travel credit cards typically earn travel rewards in place of cash back on your purchases. If you have travel-related savings goals, these types of cards can help you reach them without going over budget.

For example, many Chase credit cards earn Chase Ultimate Rewards points on purchases. These points can be redeemed for flights, hotel stays, car rentals, and more. Similarly, multiple American Express credit cards earn Amex Membership Rewards points, which can also be redeemed for flights, hotel stays, rental cars, and more.

Using travel credit cards on everyday purchases might help you fit a vacation or family trip into your budget without overspending. You aren’t necessarily spending more money than you normally would, but you’re earning valuable rewards on purchases.

Learn more in our Chase Sapphire Preferred® Card review.

Setting alerts

Your online credit card account typically has an area where you can set up alert notifications. Getting notifications by email or text message could help you track your spending and stay on top of credit card payments. Available notifications might include when you’re getting close to your credit limit or a specific amount you’ve set.

If you’re budgeting to spend less than $800 each month on a card with a $1,000 credit limit, it could be helpful to set an alert notification for when you’re at $600. This will help you know when you’re getting close and whether you need to adjust your spending. It might also be helpful to set a reminder for when your credit card payment is due so you don’t incur any late fees or negatively impact your credit score.

Setting bills to autopay

Because tracking your spending is part of budgeting, it’s important to have a system for your monthly recurring bills. This could include a way to easily pay off cell phone bills, internet bills, and other utility bills. Setting your bills to autopay with a credit card decreases your chances of missing payments. If you use a rewards credit card for automatic payments, you’ll earn rewards at the same time. See our list of the best rewards credit cards for more details.

Using it for specific purposes only

If you’re worried about overspending on your credit card, consider using it only for specific expenses. Using your credit card for bills set to autopay is an easy way to not miss payments while earning credit card rewards. Using this method, you could set up autopay for the bills you want and never have to worry about carrying a credit card in your wallet.

However, keep in mind that using a rewards credit card for all your purchases will help you earn more rewards, which can potentially stretch your budget. If you want to work up to using a credit card on everything, consider using it only for groceries or only when you fill up your car to start. This can help you get in the habit of using and paying off your card over time.

Setting limits for yourself

Because you can always check your credit card balance online, it’s easy to set a spending limit for yourself. For example, you might not want to spend more than $1,000 on combined everyday expenses each month, including gas, groceries, and eating out. Use your credit card to pay for these expenses, and then frequently check your balance to make sure you don’t go over your limit.

If you’re halfway through a month and getting close to your limit, you may need to adjust your budget. This could include setting stricter restrictions on your spending or increasing your limit to be more realistic. Either way, you’ll be better prepared for the next month of budgeting.

Reviewing spending trends over time

Part of tracking your spending with a credit card includes a thorough review of your spending trends over time. Frequent reviews of your spending are best, but to see a trend, you might need to review a few weeks or months' worth of transactions. Also, if your credit card issuer offers a year-end summary of your spending, this is an excellent time to review your spending trends throughout the year. You may notice spikes in spending or times when you weren’t spending as much.

Seeing the data behind your spending makes it easier to keep track of when and where you need to adjust your budget. If you didn’t have this data, it could be difficult to see if you ever needed to adjust anything, and you might end up spending more than your budget allows.

Modifying spending as needed

If you’ve reviewed your spending trends, it’s time to make adjustments depending on what you find. For example, you may be spending more on food delivery and takeout purchases than you have in the past. You might need to cut back on spending in this category if it’s more than you’ve allotted in your budget.

Certain trends, such as paying more for heating bills in the winter, are common. So don’t be alarmed if you see spikes in spending in certain categories. However, seeing the data for these spikes can help you adjust your budget to align with your needs during certain times of the year. You might allot more spending on utilities during the colder months, which could mean you pull money from another category, such as entertainment.

The bottom line

Credit cards don’t have to be a financial burden. If you know how to use them, they can become one of your best financial assets, especially if you’re budgeting. It’s not always easy to learn how to manage your money, which is why it’s important to take advantage of financial resources if you can. As you consider your financial situation and what you want to accomplish with a budget, think about how you can use credit cards to achieve your goals.

Tracking your spending and earning rewards on purchases are two of the biggest benefits of incorporating a credit card into your budgeting strategy. But you have plenty of other benefits as well. Remember to align a credit card’s features with your budget so you can help boost the positive impact of the card on your financial situation.

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Author Details

Ben Walker, CEPF, CFEI® Ben Walker, CEPF, CFEI®, is credit cards specialist. For over a decade, he's leveraged credit card points and miles to travel the world. His expertise extends to other areas of personal finance — including loans, insurance, investing, and real estate — and you can find his insights on The Washington Post, Debt.com, Yahoo! Finance, and Fox Business.

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