Please talk to me about regular spending on credit card

[LongStoryLong]

Morning everyone, just looking for some advice on putting all our spending on a credit card and paying it off monthly - how to do it, any pitfalls rewards schemes you like.

Our finances are….bumpy at the moment. We get paid at different times, our outgoings are from different accounts (mine, his, joint) and at different times. The irony is, we’re very solvent and have lots of savings, very lucky, but our money is never in the right place at the right time, and I frequently feel panicky and unstable. Also, we’re going to be doing a bit building project this year, and I want to make those payments work for us; and there are some bigger trips we’d like to make over the next few years; all in all, I thought transferring all our regular spending to a rewards-based credit card would be a good idea.

my questions: is this a good idea? Is it easy to budget? Any experiences you can share? What cards do you use? And particularly: how do you go about transferring all bills and regular spending to the card?

Any advice would help, honestly- something needs to change around here!

If your finances are bumpy don't plan any big trips until you have sufficient cash flow

I'm not completely sure that this is the best way to solve your problems - we do a monthly check just after we get paid and make sure that the right accounts have enough money in them, plus enough of a buffer as well.

Re your Q, we put some of our monthly spending on a credit card, but only because we've set this up so that the whole balance is automatically paid off every month (as we'd manage to forget otherwise). I think it's more difficult to get decent rewards now, but check Money Saving Expert. We've had our credit cards for ages, and get 0.5% cash back I think, but other bank accounts can be better, e.g. Chase gives 1%.

I'd be cautious in your situation - Money Saving Expert and Meaningful Money are both really good places to start reading up on finances.

We do this. At the moment we have two airline cards, plus a card for overseas spending that has no exchange fee. All of them are set up to be paid in full by direct debit from our joint bills account. We each put a set amount in the joint account that covers all bills and spending, and then if we have a larger than usual cc bill (e.g. we’ve bought flights…) we just each transfer more in from our current accounts or savings.

It works well, and that first month, because of the retrospective bill, your finances will feel smoothed out. However, you MUST set up the dd as soon as the account is operational, NEVER pay less than the total amount, and ALWAYS ensure there’s enough money in the bills account each month to pay the cc bill, which you should keep an eye on at least weekly.

Also, don’t do this if either of you is a spendthrift.

I do this and echo exactly what @SnakesAndArrows said. Just one more thing - make sure it truly is for day to day spending. Don't fall into the trap of buying things that you wouldn't normally buy, just because it's on tick.

This all sounds like solid, practical
advice. Was it difficult transferring the bills from current to credit? I’m hoping to put things like council tax and utility bills on there to maximise the benefit- is that a good idea?

Which airline cards are you using, if you don’t mind saying?

Yes. Do you put regular spending on a credit card and pay it off every month? Any wisdom you can share about that?

I’ve not transferred council tax and utility bills onto them yet. I have been considering it, but we do swap and change between ccs fairly frequently to max points and minimise charges so it may be a faff.

Currently using a Barclaycard Avios and Amex Gold (which is good for both Avios and Virgin). Head for Points and MSE are helpful websites. We’ve only just started doing the airline miles - previously used cashback cards.

I'm not sure if you can put things like utility bills etc. onto a credit card in this way, but it would stress me out I think - putting spending onto a credit card sort of puts you a month or so in arrears, so if you do this make sure you don't think, Hurray, I have lots of £ during the first month.

I use my 0.5% cashback credit card much less now, and use my 1% cashback bank card instead. I definitely prefer that it's more immediate.

@SnakesAndArrows
plus a card for overseas spending that has no exchange fee.

Please could you let us know which this one is?

This is really good advice. We have a notional ceiling spend every month to keep within the allotted amount we have in the bills account.

It also helps that DH is not at all spendy and I’m a finances hawk. I would never in a million years have done this with exDH who was hopeless with money.

Halifax Clarity

We started doing it a couple of years ago when I had a month between jobs with no income. A couple of things I would recommend.

1. Get your credit card company's app to track your balance.
2. Don't overspend. Ours is used predominantly for food and petrol/diesel.

We also shift any surplus money in the current accounts (we have 2) into our linked savings account to sit there and earn a bit of interest until the bill comes in.

If your income is irregular, then using a credit card can help with cashflow because it delays money coming out of your account by 3-6 weeks and it comes out in one bill, rather than the dribs and drabs of everyday spending.

The key point is that you must pay it off in full every month and view the card solely as a payment tool, not free money, which sounds obvious, but many people especially on here think that no-one's able to use a credit card like that.

A lot of people seem to do well with Amex, but I think that's only really if you can fly from London and/or take long haul trips. If you only really holiday in Europe and don't use London airports, I can't see the benefit.

I use an old Barclaycard cashback card which pays 0.5%, I don't know if there are better options for credit cards.

But another option could be to put all your spending on a Chase debit card, which pays 1% and there's also a linked savings account which pays a decent rate of interest.

To deal with the irregular income, I would get all your income paid into one account and then transfer it immediately into a savings account to earn interest.

I'd then pay a regular amount from the savings account to a bills account to cover your monthly bills, perhaps a second monthly amount to a spending account, eg the Chase account for the cashback. Depending on how you split money with your partner, you could also make monthly transfers to separate accounts for personal spending money.

Then your money is earning interest when it's not needed in the next month, and you're simulating being paid regularly, even when you are not, which will help you keep track of what money you have and how much you're spending.

Also have a Barclaycard Avios credit card. I’ve had this system for years where I put all day to day spending on a credit card and pay it off at the end of the month. Initially I did it this way for security reasons - for online transactions in particular, any dodgy transactions on a debit card mean it’s your own money that’s tied up whereas with a credit card it’s the banks money - also there is some protection for transactions over £100. The airline points are a huge incentive however and I’ve had many trips with effectively “free” flights.

Household bills aren’t on the credit card, they are on direct debit. I suspect some places may charge % to use credit card, which negates the benefit, or won’t allow credit card payments at all (the theory being that bills shouldn’t be paid by ‘debt’). May depend on the provider.

I’ve brought DH to my way of paying and while it took a little adjustment, it works as long as you don’t spend more because you are using credit. Any budgeting techniques that you already use should still apply.

Pretty certain you can't pay your standard direct debit payments like mortgage, council tax, utilities etc by credit card. By nature a credit card is building up credit, not paying it off so I think you'll have to think again on that one.

What I would suggest is that you contact all your direct debit companies and ask to change the date on which the payments are made. And then use just 1 account (joint preferably) to pay them from. Must providers will be flexible with payment dates although some will only have set days (from experience c.tax have 4 per month) but if you can get these payments going out just 2 or 3 times per month then that should help you plan your finances better.

No I definitely wouldn't.

I would put all your fixed and variable regular costs onto direct debits and standing orders - utility , debt payments, etc - through the joint account and move a cushion from savings to cover it. Then work out a fair share and both of you transfer that over each month.

I would consider other day to day spending on a credit card (not for me but maybe for you)

What I have:

Joint account as above
Current account for groceries
ISA for regular savings
Premium Bonds for fun savings
Current account for daily spends

There’s another thread on the go at the moment and some useful info on different reward schemes

www.mumsnet.com/talk/am_i_being_unreasonable/5154377-higher-earners-are-we-spendingwasting-too-much-trigger-warning?page=6&reply=137934216

We do that. I’ve been doing so for 20 years (always pay off in full every month) and have used the John Lewis card as that gives cash vouchers (I’m not organised enough for air miles). But yes, whilst it’s handy (and means spending is better protected) I’ve never spent money I didn’t already have in my bank account.

I've done this since I was able to get a credit card again (low credit rating due to 2 x feckless husbands and 2 divorced!) and it has steadily increased my credit rating till I am now excellent. So clearly it's a good thing to do. Plus there are extra protections buying things on a cc.

I have a Barclaycard and a Tesco Mastercard, neither lets you have direct debits payments on them. I just use them for most shopping or any big items.

For the last quarter of a century we've only used a debit card if the mechanics of the credit system break down.

I've never seen it as free money, just a different way of moving the money we have. We've never not paid it off in full each month. If we want big purchases we make sure we have the money available beforehand. We certainly don't look at the credit limit and think "oooh, I've got three thousand pounds to spend!"

It had never occurred to me that one might pay regular bills with the card - I suspect it's not possible because H would have been all over that for the points (though I might be wrong, he could have missed a change).

We have the Tesco card, which is less value than it used to be but still brings in a few treats (we also shop there, and before getting an EV bought most of our petrol from them too). Back in the noughties it helped us with a Merlin pass and a couple of Haven holidays, nowadays we just go to Zizzi's

I would recommend getting on top of the “bumpy” bit first and foremost, if you have plenty in the bank then there should be no bumpy worries. Get a joint account with a good cash back rate (see money saving expert). Put a “float” in the account from your savings that will cover a months bills, and then just transfer in accordingly when you each get paid. You won’t have to worry about the dates because you have the float in there.
And unlike with a credit card, you don’t need to worry about making a late payment.

I try to put all our day to day spending on my credit card because I get cashback on it. I have always done this because it's free money. Since the interest rates went up I have now started paying the money I have spent on my credit card into a savings account, so it's there waiting to pay the bill when it's due (and then pay it when it's due, not when it arrives).

I also have a Halifax Clarity card for overseas spending, and leave the balance of that sitting in my savings account till it's due too. Halifax now have cashback offers specific to your previous spending which I may try and take advantage of going forward, although it may prove too complicated for me to mix and match!

We put everything on our John Lewis Card.....food shopping,meals out, petrol, holidays, clothes, bars. I know EXACTLY how much is on there as I check the app at least twice a week. It's paid off every month in full.
We also have a Halifax Clarity card for trips abroad.

As I said, the Amex Gold points can be used in other schemes e.g. VA from Manchester. Also, you can use Avios with Aer Lingus.