How to Use a Credit Card to Finally Stay On Budget

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Originally published October 11, 2016

As someone who’s self-employed, I’ve found it very difficult to stick to a regular budget while having inconsistent income. My solution has been to use a personal credit card for all household bills and daily purchases, then pay the balance off every week.

If you’ve been struggling to stick to a good spending plan that helps you end your student loan debt, here’s how to use a credit card to create a successful budget.

1. Start paying all personal bills with one credit card
2. Use the same credit card for daily purchases
3. Review the transactions weekly
4. Set a regular spending limit
5. Pay off the balance every week
6. Cash in rewards or points earned
7. Consider using a credit card to pay off student loans
Plus: Benefits of using a credit card to stay on budget

1. Start paying all personal bills with one credit card

Choose one personal credit card that both you and your partner can easily access and ensure that it offers cash back rewards on purchases you make the most. Better yet, sign on with a bank like Citi that provides credit card rewards for student loans ⁠— via Citi’s ThankYou® Rewards program, you could earn up to $1,000 to send along to your student loan servicer or lender.

Make a list of all your household bills, including utilities, internet and cellphone, and log into those accounts online to update the automatic payment method. This will help alleviate some cash flow in your bank account while still being able to manage your finances all in one place. Just make sure you set a reminder to pay off your plastic’s balance on time (see No. 5 below) so that you’re not wasting your rewards on interest and late fees.

2. Use the same credit card for daily purchases

Using the same credit card account, start swiping it for all your daily purchases. In addition to your household bills, use this card for groceries, gas and other necessities.

Nearly every purchase you make should be charged to this new credit card. Consolidating all of your bills and purchases onto one card will help you track every expense you make.

Budgeting as a couple makes it much more difficult since you can’t always communicate in real time before making a purchase. However, with a credit card you’re able to review the transactions every week.

If something doesn’t look quite right, you can request a refund or dispute a charge if needed, without ever losing money in your bank account.

3. Review the transactions weekly

As someone with an irregular income, I find it much simpler to review my credit card transactions every week.

I do this every Monday morning before I start my regular work week, then schedule that week’s payment to cover all of last week’s expenses. This helps keep my credit card balance low and manageable, so I don’t overspend. Keeping your spending in check could help you make an extra large student loan payment, one of many strategies to pay off your education debt faster.

You may find it more beneficial to check in every week and then make a payment once a month. Do what works best for you and your finances, but it’s still advisable to review the purchases every week so you don’t miss any disputes or double charges.

4. Set a regular spending limit

Much like a traditional budget, the key to staying in control of credit card spending is setting a monthly spending limit. If you’re not used to budgeting at all, it may take a few months to get into the good habit of setting a spending limit and sticking to it.

Be wary of becoming trigger-happy. Only purchase what you’d be comfortable buying using straight cash pulled out of your wallet. This way, you’ll reap the rewards of credit cards without experiencing the potential risk of going into high-interest debt.

Depending on the financial software you use to manage your budget, you can set alerts to warn you if you’re approaching your spending limit. If you prefer getting real-time results, use a money management app to pull up your budget information on the go.

5. Pay off the balance every week

It’s key to check in with your budget weekly so you can adjust your spending throughout the month. Otherwise, you risk overspending and racking up credit card debt, which can be a dangerous thing for your finances, particularly if you’re already fending off student loans.

As you’re checking in with your budget and verifying all expenses once per week, go ahead and schedule a payment to pay off the balance. Simply add up all of the purchases from last week and make a payment from your checking account. Never carrying a balance will keep your finances safe from potential harm.

6. Cash in rewards or points earned

One of the most attractive benefits to using a credit card to finally stay on budget is that you could receive rewards and cash back for all your purchases.

You’d be surprised how much you spend every week, and those rewards can add up pretty quickly. Depending on which type of credit card you use, you could earn up to several hundreds of dollars in cash back or statement credits for things you purchase every day.

In fact, my husband and I earn about $25 back every single month for charges made to our credit card for household bills, groceries and other lifestyle needs. That adds up to between $300 cash back per year for us.

7. Seek credit card rewards for student loan payments too

Employing a credit card can keep you on budget ⁠— it could also potentially help you earn rewards for your student loan payments.

While paying student loans with a credit card is generally a no-go with almost all federal loan servicers and private lenders, you could circumvent the rules using a third-party payment service like Plastiq.

Just be sure your credit card’s rewards trump the potential fees charged by your lender and the payment provider. Plastiq, for example, levies a 2.5% per-transaction fee (and only accepts Visa, Mastercard and Discover on education debt payments).

Again, ensure your card’s rewards outweigh Gift of College’s fees. Otherwise, all the shuffling won’t help your cause.

Benefits of using a credit card to stay on budget

After many years of trying (and failing) to stick to a budget plan, this strategy of using credit cards has finally helped my husband and I stick to a budget. There are quite a few advantages to this method, such as:

  • Not having to balance multiple checking accounts
  • Easily tracking your spending versus budgeting every single penny
  • Simplified bookkeeping strategy for couples
  • More cash flow in your bank account
  • Less confusion about expenses or purchase disputes
  • Getting credit card rewards for everyday purchases

When used correctly, a credit card can also help you stay on track with your student loan repayment. By sticking to your budget and cashing in rewards, you should have more money left over each month to send to your lender. Calculate your potential savings using our lump-sum extra payment calculator.

If, for whatever reason, this credit card budget approach isn’t right for you, consider other budgeting methods for financial health.

Andrew Pentis contributed to this report.

Interested in refinancing student loans?

Here are the top 6 lenders of 2020!
LenderVariable APREligible Degrees 
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& Graduate

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1.89% – 5.90%2Undergrad
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2.25% – 6.09%3Undergrad
& Graduate

Visit SoFi

1.89% – 6.77%4Undergrad
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Visit Splash

2.39% – 6.01%Undergrad
& Graduate

Visit Elfi

1.99% – 5.41%5Undergrad
& Graduate

Visit CommonBond

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1 Important Disclosures for Earnest.

Earnest Disclosures

To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.

Earnest fixed rate loan rates range from 2.98% APR (with Auto Pay) to 5.79% APR (with Auto Pay). Variable rate loan rates range from 1.99% APR (with Auto Pay) to 5.64% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of July 31, 2020, and are subject to change based on market conditions and borrower eligibility.

Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.

The information provided on this page is updated as of 7/31/2020. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at [email protected], or call 888-601-2801 for more information on our student loan refinance product.

© 2020 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.


2 Important Disclosures for Laurel Road.

Laurel Road Disclosures

All credit products are subject to credit approval.

Laurel Road began originating student loans in 2013 and has since helped thousands of professionals with undergraduate and postgraduate degrees consolidate and refinance more than $4 billion in federal and private school loans. Laurel Road also offers a suite of online graduate school loan products and personal loans that help simplify lending through customized technology and personalized service. In April 2019, Laurel Road was acquired by KeyBank, one of the nation’s largest bank-based financial services companies. Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. All loans are provided by KeyBank National Association, a nationally chartered bank. Member FDIC. For more information, visit www.laurelroad.com.

As used throughout these Terms & Conditions, the term “Lender” refers to KeyBank National Association and its affiliates, agents, guaranty insurers, investors, assigns, and successors in interest.

  1. Checking your rate with Laurel Road only requires a soft credit pull, which will not affect your credit score. To proceed with an application, a hard credit pull will be required, which may affect your credit score.
  2. Savings vary based on rate and term of your existing and refinanced loan(s). Refinancing to a longer term may lower your monthly payments, but may also increase the total interest paid over the life of the loan. Refinancing to a shorter term may increase your monthly payments, but may lower the total interest paid over the life of the loan. Review your loan documentation for total cost of your refinanced loan.
  3. After loan disbursement, if a borrower documents a qualifying economic hardship, we may agree in our discretion to allow for full or partial forbearance of payments for one or more 3-month time periods (not to exceed 12 months in the aggregate during the term of your loan), provided that we receive acceptable documentation (including updating documentation) of the nature and expected duration of the borrower’s economic hardship. During any period of forbearance interest will continue to accrue. At the end of the forbearance period, any unpaid accrued interest will be capitalized and be added to the remaining principle amount of the loan.
  4. Automatic Payment (“AutoPay”) Discount: if the borrower chooses to make monthly payments automatically from a bank account, the interest rate will decrease by 0.25% and will increase back if the borrower stops making (or we stop accepting) monthly payments automatically from the borrower’s bank account. The 0.25% AutoPay discount will not reduce the monthly payment; instead, the discount is applied to the principal to help pay the loan down faster.

Assumptions: Repayment examples above assume a loan amount of $10,000 with repayment beginning immediately following disbursement. Repayment examples do not include the 0.25% AutoPay Discount.

Annual Percentage Rate (“APR”): This term represents the actual cost of financing to the borrower over the life of the loan expressed as a yearly rate.

Interest Rate: A simple annual rate that is applied to an unpaid balance.

Variable Rates: The current index for variable rate loans is derived from the one-month London Interbank Offered Rate (“LIBOR”) and changes in the LIBOR index may cause your monthly payment to increase. Borrowers who take out a term of 5, 7, or 10 years will have a maximum interest rate of 9%, those who take out a 15 or 20-year variable loan will have a maximum interest rate of 10%.

KEYBANK NATIONAL ASSOCIATION RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.

This information is current as of September 9, 2020. Information and rates are subject to change without notice.
 


3 Important Disclosures for SoFi.

SoFi Disclosures

  1. Student loan Refinance: Fixed rates from 2.99% APR to 6.09% APR (with AutoPay). Variable rates from 2.25% APR to 6.09% APR (with AutoPay). Interest rates on variable rate loans are capped at either 8.95% or 9.95% depending on term of loan. See APR examples and terms. Lowest variable rate of 2.25% APR assumes current 1 month LIBOR rate of 0.18% plus 2.32% margin minus 0.25% ACH discount. Not all borrowers receive the lowest rate. If approved for a loan, the fixed or variable interest rate offered will depend on your creditworthiness, and the term of the loan and other factors, and will be within the ranges of rates listed above. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. See eligibility details. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. *To check the rates and terms you qualify for, SoFi conducts a soft credit inquiry. Unlike hard credit inquiries, soft credit inquiries (or soft credit pulls) do not impact your credit score. Soft credit inquiries allow SoFi to show you what rates and terms SoFi can offer you up front. After seeing your rates, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit inquiry. Hard credit inquiries (or hard credit pulls) are required for SoFi to be able to issue you a loan. In addition to requiring your explicit permission, these credit pulls may impact your credit score. Terms and Conditions Apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. 

4 Important Disclosures for Splash Financial.

Splash Financial Disclosures

Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet applicable underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates are reserved for the highest qualified borrowers. If approved, your actual rate will be within a range of rates and will depend on a variety of factors, including term of loan, a responsible financial history, income and other factors. Refinancing or consolidating private and federal student loans may not be the right decision for everyone. Federal loans carry special benefits not available for loans made through Splash Financial, for example, public service loan forgiveness and economic hardship programs, fee waivers and rebates on the principal, which may not be accessible to you after you refinance. The rates displayed may include a 0.25% autopay discount.

The information you provide to us is an inquiry to determine whether we or our lenders can make a loan offer that meets your needs. If we or any of our lending partners has an available loan offer for you, you will be invited to submit a loan application to the lender for its review. We do not guarantee that you will receive any loan offers or that your loan application will be approved. Offers are subject to credit approval and are available only to U.S. citizens or permanent residents who meet applicable underwriting requirements. Not all borrowers will receive the lowest rates, which are available to the most qualified borrowers. Participating lenders, rates and terms are subject to change at any time without notice.

To check the rates and terms you qualify for, Splash Financial conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, the lender will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

Splash Financial and our lending partners reserve the right to modify or discontinue products and benefits at any time without notice. To qualify, a borrower must be a U.S. citizen and meet our lending partner’s underwriting requirements. Lowest rates are reserved for the highest qualified borrowers. This information is current as of September 10, 2020.


5 Important Disclosures for CommonBond.

CommonBond Disclosures

Offered terms are subject to change and state law restriction. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900), NMLS Consumer Access. If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown. ‍All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 0.16% effective August 10, 2020.

Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print to help you understand what you are buying. Be sure to consult with a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time.