How do I build my credit and gain points on my credit card, while never over spending or paying CRAZY 20% fees? Easy, pre-pay your credit card then spend! “You can do that” I can hear everyone shriek in unison. I’m all about “win, win” scenarios so this is how I stay on a “cash” like strict budget and get awesome points.
1. Find out how much you can spend on EVERYDAY spending by going through your budget. Deduct the FIXED expenses like Rent/Mortgage, Retirement, loans, and credit cards and that will leave you with how much you can spend on everything else. For this example, let’s say it is $1,000 every two weeks.
2. When you get paid, take the $1,000 and make a payment onto your credit card. If you’re credit card was a zero, which it should have been ;), then you’ll now have an over payment of $1,000. You could even ask you bank to transfer the $1,000 every two weeks. They can do that!
3. Spend like you normally would spend but now you are using your money vs. credit. Check your credit card balance and when it gets close to $1,000 – stop spending.
4. Repeat when your next pay cheque comes in. Transfer $1,000 before you even start spending and if there is money left over from last pay’s $1,000 pre-payment deduct it from the $1,000 you transfer. Then save the amount you didn’t transfer.
5. Charging and paying off your credit card twice a month will keep your credit score strong. Make sure to stop at $1,000 like it is cash or you’ll be ruining the genius of this plan.
This will keep your points, credit rating growing but will avoid you from over spending and paying 20% interest. Win, win, win.
Have an awesome week,