How to Budget for Credit Cards

Using credit cards can be dangerous because of the high interest rate that they make you pay. However, there are ways to use credit cards without getting yourself into debt. Following the steps below will help you budget for credit cards and may even save you money.

Instructions

Difficulty: Moderate

Things You’ll Need:

• Credit card
• Interest bearing bank account
• Monthly budget

1. Apply for a credit card. Research your choices. You may be able to do this as easily as looking in your mailbox. Credit card companies are always sending out applications.
2. Use the credit card with the lowest interest rate. Some credit cards offer introductory rates and you may be able to get one that doesn't charge any interest for a certain period.
3. Buy that item you have been dying to have, such as a new computer, a TV or an mp3 player. Make sure you put it on your credit card.
4. Calculate the amount you will have to pay each month in order for you to keep it interest free. For example, if you were to buy a computer today and it cost $500, and the credit card is interest free for 5 months, you would need to put $100 in your budget for credit cards.
5. Make your budget for the month and include the amount you need to pay to the credit card company. The whole idea of a budget is to make sure you have enough money coming in to cover what is going out. There is budget-making software that you can use to make this task easier if you are allergic to a pad and pencil.
6. Put the money into a savings account. Some companies require you to make a minimum payment every month to keep the interest free promotion alive. If your company does, pay the minimum payment and put the rest into an interest bearing savings account. This way you will not only have the full amount to pay before the due date, but you will also have made some interest on the money. It may not be much, but every little bit helps and when you add in the finance charges you are saving.
7. Relax and see how easy it is to use credit cards to their advantage because you now know not only how to budget for credit cards but how to earn money on credit cards.

Tips & Warnings

• Make sure your bank account pays you interest.
• Be certain of the credit card's terms before you use it. Some promotional gimmicks are just that--gimmicks.