If you’ve been using a debit card for all of your purchases for years — carefully monitor your checking account balance and don’t spend more than you have in the bank — transfer spend on a credit card could be a big change.
I used to be one of those people who paid for everything with a debit card because they were afraid of going into debt. i thought debit card is a safe spending option as you cannot spend more than you have in your account. I think it’s financial responsibility. But my perspective changed as my interest in travel increased and I knew I could earn great rewards by signing up and using a credit card.
Related: Credit Cards vs Debit Cards: Which is Smarter?
Perhaps you have have a rewards credit card or two but hesitate to transfer all your spending to a credit card. You may have applied for a credit card and charged enough to satisfy Minimum spending requirement for the bonus, but then you always go back to using your debit card. If you’re wondering about switching your spending from debit to credit, here are some tips to help you make the change.
Adjust your thinking
When I first decided to switch my spending to a credit card, I knew I wanted to be a responsible credit card user. I don’t consider credit cards to be free money or long-term loans to pay off over time through minimal payments. I don’t want to pay interest, which means not charging more than I can pay each month.
Related: The best way to pay your credit card bill
One thing that has helped me is I treat my credit card like a debit card. That means not spending more than I have in the bank. Although my credit card did not withdraw directly from my checking account for each purchase (as my debit card did), I did.
Maybe in the past you only paid the minimum by credit card. If so, paying in full will require you to adjust your thinking. Treat your credit card like a debit card. Don’t spend more than you can pay back each month.
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Related: TPG’s 10 commandments about credit cards
Know your credit limit
You’ll want to avoid accidentally exceed your credit limit on a lower limit card. If you do, transactions may be declined or you may be charged. But you also shouldn’t consider high-limit cards as the maximum amount available to use.
Keep your balance within reasonable limits of your available credit increase your credit score. Your credit utilization rate take your 30% FICO scoreso controlling your balance is very important.
Start with just one card
Maximizing your points earned and mileage often involves strategizing which cards to use for different purchases. How many cards are included? category bonus — bonus points for different types of spending, such as restaurant or the gas station — it can be quite lucrative to use different cards for different categories of purchases. That might mean using a American Express® Gold Card for 4 points per dollar at restaurants and supermarkets in the United States (with purchases up to $25,000 per calendar year, then 1 point per dollar) and switch to Citi Premier® Card with 3 points per dollar for filling up your gas tank.
However, remembering which card to use for each purchase can feel overwhelming if you’re new to travel rewards and using your credit card for everything.
Related: 4 ways to manage spending on multiple credit card accounts
A good way to maximize points earned using only one card at a time is through new card signup bonus. Open a new credit card and only use it until you meet the minimum spending requirement (this is required to earn the welcome bonus), making sure to pay off your balance in full each month.
Once done, apply for another card and transfer all your spending to that card. You are earning a lot of points by getting the signup bonus, although you may not be using all the bonus categories that you can maximize by juggling multiple cards. But keep in mind that some issuers — including American Express, Chase And american bank — limit the number of cards that you can be approved for.
Related: The Ultimate Guide to Credit Card Application Restrictions
Once you’re comfortable with paying off your balance in full on a consistent monthly basis, you can add an extra level of complexity, such as transferring your spending to different cards to take advantage of catalog rewards.
Transfer all payments automatically
Automated payments make life easier by removing one more thing from the to-do list. If you have automated transactions using your checking account or debit card and use your credit card for other purchases, keeping track of your finances can complicate your finances. There is more to manage. Keep it simple by transferring as many automatic payments as possible to your credit card.
You may not be able to use your credit card to automatically pay for things. Your mortgage payment and car purchase are good examples. As a result, you’ll still have to keep track of those in your checking account. Correct, Some services will accept your credit card for a fee and send a check to your lender or other merchant, but you’ll have to consider whether the fee is worth it to you.
For your other bills — such as mobile phone, utilities, fitness club member, streaming service — it only takes a few minutes to update your online payment, then you will start earning rewards for those purchases.
Review your transactions
Whether you check your credit card account daily or monthly, it’s important to take the time to make sure all your transactions are posted correctly. Not only should you consider transactions with the correct amount, but you should Review your points earned to verify that you have earned the correct score. And check any statement credit you want to get, such as from Chasing Offers or Amex Offers.
Set up automatic payments or schedule manual payments
You don’t want to forget a payment, thus incurring late fees and interest. While some card issuers may Free late fee and interest as a one-time courtesy, you shouldn’t be in the habit of paying late.
Determine the payment schedule that works best for you. Some people pay weekly; others pay monthly. If you’re afraid of overspending and don’t have the money in your checking account to pay your bills, don’t wait until the due date. You can make multiple payments, even paying your balance daily or weekly.
You should set up automatic payment for your full balance (ideally) or the minimum balance by the due date if you’re worried you might forget to pay your bill.
bottom line
I am a long time travel rewards enthusiast and I spend a lot of time and energy learning how to maximize my spending and earn rewards. However, it seems people are signing up for new credit cards (and spending thousands on them) to earn points to redeem first class flights and in a luxury hotel.
But not so. Even I am surprised when a friend or family member pulls out a debit card to pay for a purchase. While they may be interested in travel rewards, going from debit to credit can be stressful, and I understand that.
Going from debit to credit was one of my best money-making moves. My only regret is not doing so sooner.
Additional reporting by Ryan Smith.
