6 tips for budgeting with a credit card

Budgeting takes effort. But your credit card comes with tools you can use to help. Learn how you can use it to help manage spending, track payments, maximize your rewards and more.

What you’ll learn:

• Your credit card statement is available online almost all the time. You can use it to monitor your spending and categorize expenses.

• If you have a rewards credit card, using it to pay for regular expenses could help you earn cash back or miles on things you’re already purchasing. 

• Enabling account alerts and automating payments could help you monitor your balance, receive due date reminders and avoid late payments.

• You can use your credit card to build credit by using it responsibly. That means doing things like making payments on time and staying below your credit limit.

Here are six ways you can use your credit card to help create and maintain a budget.

Your credit card statement is like a diary that lists where you’re using your card and how much you’re spending. And using your issuer’s mobile app or signing in online gives you access almost anytime you want to review your transactions.

Some credit card issuers will group transactions under spending categories. For example, Capital One uses categories such as dining, grocery, merchandise, gas/automotive and phone/cable. If your issuer doesn’t do this, you could use an online budgeting tool from the Consumer Financial Protection Bureau (CFPB).

By using a credit card to pay for some monthly expenses, you could stretch your budget by earning rewards on things you’re already buying. 

For example, Savor from Capital One lets cardholders earn unlimited 3% cash back at grocery stores and on dining, entertainment and popular streaming services, plus 1% cash back on all other purchases.¹ It’s a good option to buy food and set up recurring payments for your subscriptions.

But pay attention to potential fees that could cut into your rewards. Some businesses charge extra transaction or processing fees if you use a credit card. Utility bills are one example where it may cost more to use a credit card.

You may be familiar with fraud alerts. But did you know you might also have the option to set up spending alerts? These alerts could notify you every time a purchase is approved on your card or when your balance goes over a set limit.

For Capital One cardholders, Eno, your Capital One assistant, can also send spending insights about duplicate charges, higher-than-usual tips and more. You can also ask Eno questions about your accounts online, in the Capital One Mobile app or via text.^2,3

There’s a lot to keep track of if you’re new to managing a budget. Setting up automatic payments could mean one less thing to worry about. Plus, automatic payments could help you avoid late fees.

Capital One customers have access to AutoPay. Once you’re enrolled, you can choose to pay your minimum payment, your last statement balance or a fixed payment amount of your choice. 

A cardholder’s AutoPay payment will be scheduled for their statement due date unless they select a different date. For more control over their finances, cardholders can change their statement due date. They can also select a date up to 10 days from their statement due date for their AutoPay payment date.

Once you’ve created your budget, it takes effort to stick to it. That’s why setting a spending limit for your credit card transactions can help. You may not be able to formally set a spending limit with your credit card issuer—it’s more common for authorized users and with business credit cards. 

But you could decide on a limit for yourself to avoid maxing out your card.

Why’s that important? Overspending with your card will affect your credit utilization ratio, an important credit-scoring factor that measures how much of your available credit you’re using. The CFPB recommends keeping your credit utilization below 30%. So if you have only one credit card with a limit of $2,000, that would mean keeping your balance below $600.

Having a plan and a budget is great. But they don’t mean as much if you don’t stick to them. Using your card responsibly is one way to stay on track. And by doing things like making on-time payments every month and staying below your credit limit, you could also build credit.

If you want to track your progress, you could use CreditWise from Capital One. It gives you access to your VantageScore® 3.0 credit score and your TransUnion® report. CreditWise is free for everyone. And using it won’t hurt your credit.

You can also visit AnnualCreditReport.com for free copies of your credit reports.

Budgeting with a credit card can be part of your approach to managing money. It can include strategies like setting spending limits, using automatic payments and maximizing your rewards.

If you like the idea of budgeting with a credit card, you could compare Capital One cards to find one that meets your needs. And with pre-approval from Capital One, you can find out whether you’re pre-approved before applying. It’s quick and it won’t hurt your credit score.