Understanding how to use your credit cards can help you manage your budget, as well as help you effectively manage debt, pay for large purchases and reap the benefits of your cards.

Strategically use your cards

When you get ready to make a purchase, how do you decide if you want to put the expense on your credit card or debit card?

For starters, your debit card is like paying cash. It comes out of your checking account as soon as you make the purchase. With your credit card, you are borrowing the money and will need to pay it back when your bill is due. One important consideration is whether you can pay off your credit card bill at the end of the month. If you are working with a tight budget, it might be worth it to use your debit card to ensure you don’t overspend.

When to use a credit card or emergency savings

Another important factor to consider is if you should use your credit card or tap into your emergency savings. Your emergency savings should be money you have set aside for a rainy day or a worst-case scenario situation. Your credit card should be used for expenses you know you can pay off when the bill comes in a month.

By paying off your statement balance every month, you can avoid debt and increase your credit score.

Check on your card rewards

Each year, refresh yourself on the reward programs for your cards and how many points you currently have racked up. You might have travel points or cash back you can use. Different cards also have different programs throughout the year, meaning one month you might get more money if you shop at a specific retailer or your gas purchases might earn you more points. Stay on top of these programs so you can get the most of your cards.

Understanding how to use your credit cards to maximize your budget is a key tactic to use on your path to financial wellness.

For more educational insight on credit cards, visit the UMB Financial Education Center and our course on credit cards.

UMB personal banking solutions offer convenience and simplicity to meet all your financial needs. From home loans to auto financing and everything in between, see how UMB personal banking can work with you to find the right products for your life and lifestyle.