If you’ve been using your debit card for all your purchases for years — carefully track your checking account balance and don’t spend more than you have in the bank — shifting your spending to a credit card can be a big change.
I was one of those people who paid for everything with their debit card because they were afraid of going into debt. I thought a debit card was a safer spending option because you couldn’t spend more money than you had in your account. I thought that looked like financial responsibility. However, my perspective changed as my interest in travel grew, and I learned that I could reap great rewards by signing up for and using credit cards.
Maybe you already have a rewards credit card but are hesitant to shift your spending to a credit card. You’ve probably signed up for a credit card and charged enough to meet the minimum spending requirement for the bonus, but then, you always revert to using your debit card. If you’re on the fence about switching your spending from debit to credit, here are some tips to help you make the change.
Related: Credit Vs. Debit Cards: Which is the Smart Choice?
Adjust your mindset
When I first decided to shift my spending to a credit card, I knew I wanted to be a responsible credit card user. I don’t see credit cards as free money or long-term loans to pay off over time with minimal payments. I didn’t want to pay interest, which meant not charging more than I could pay each month.
One thing that helped me is I treated my credit card the same as my debit card. That meant not spending more than what I spent in the bank. Even though my credit card didn’t withdraw directly from my checking account for every purchase (like my debit card did), I did just that.
Maybe you’ve only made minimum payments on credit cards in the past. If so, your mindset will need to be adjusted to pay it off in full. Treat your credit card the same way you would a debit card. Don’t spend more than you can pay back each month.
Related: The Best Way to Pay Your Credit Card Bills
Know your credit limit
You want to avoid accidentally overdoing yourself Credit limit on low limit cards. If you do, transactions may be declined or you may be charged. But you should also not look at cards with high limits as the money available to get the most.
Daily newsletter
Reward your inbox with the TPG Daily Newsletter
Join over 700,000 readers for the latest news, in-depth guides and exclusive deals from TPG’s experts
Keeping your balance within a reasonable limit of your available credit can increase your credit score. Your credit utilization ratio makes up 30% of your FICO score, so it’s important to keep your balance in check.
Related: TPG’s 10 Commandments of Credit Cards
Start with just one card
Maximizing your points- and miles-earning often involves strategizing which card to use for different purchases. As many cards come with Category bonuses — Bonus points for different types of spending, such as restaurants or gas stations — Using different cards for different purchase categories can be very attractive. It can be used to make sense American Express® Gold Card 4 points per dollar at restaurants worldwide (on purchases up to $50,000 per calendar year, then 1 point per dollar) and US supermarkets (on purchases up to $25,000 per calendar year, then 1 point per dollar).
However, remembering which card to use for each purchase can seem overwhelming if you’re new to rewards travel and use your credit card for everything.
A good way to increase points earned by using only one card at a time is through a new card introductory bonus. Open a new credit card and use only that card until you meet the minimum spending requirement (which is required to earn the welcome bonus), making sure to pay off your balance in full each month.
Once that’s done, apply for another card and shift all your spending to that card. You’re generating a lot of points by receiving the welcome bonus, even if you can’t use all the bonus categories, which you can maximize by juggling multiple cards. But remember that some issuers — including American Express, Chase and Bank of America — limit the number of cards you can be approved for.
Once you’re comfortable paying off your balance in full each month, you can add more complexity, such as switching your spending to different cards to take advantage of category bonuses.
Related: The Ultimate Guide to Credit Card Application Restrictions
Shift any automatic payments
Automatic payments make life easier by knocking one more thing off the to-do list. If you have automatic transactions using your checking account or debit card and use your credit card for other purchases, tracking your finances can complicate your finances. There is more to manage. Keep it simple by shifting as many automatic payments as possible to your credit card.
You probably can’t use your credit card to autopay everything. Your mortgage and car payments are good examples. Thus, you still have to track it in your checking account. yes, Some services will accept your credit card for a fee and send a check to your loan company or other merchants, but you’ll have to weigh whether the fee is worth it to you.
For your other bills — like cellphones, utilities, fitness club memberships and streaming services — it only takes a few minutes to update your payment online and then you’ll start earning rewards for those purchases.
Related: 4 Ways to Manage Your Spending on Multiple Credit Card Accounts
Review your transactions
Whether you check your credit card account daily or monthly, it’s important to take the time to make sure all your transactions are posted correctly.
Not only are you reviewing transactions for the correct amount, but you should Review your earned points to verify that you have earned the correct amount of points. And check for any statement credits you expect to receive, such as from Chase offers or Amex offers.
Related: How to Identify and Prevent Credit Card Fraud
Set up autopay or schedule manual payments
You don’t want to miss payments and incur late fees and interest. While some card issuers may waive late charges and interest as a one-time courtesy, you shouldn’t make late payments a habit.
Decide on a payment schedule that works best for you. Some people pay weekly; Others pay monthly. If you fear overspending and not having enough money in your checking account to pay bills, don’t wait until the due date. You can also make multiple payments by paying the balance daily or weekly.
If you’re worried you might forget to pay your bill, you should set up autopay for your full balance (ideally) or minimum balance by the due date.
Related: How to set up autopay for all your credit cards
The bottom line
I’ve been a long-time travel rewards enthusiast, and I spend considerable time and energy learning how to maximize my spending and earn rewards. However, it seems like everyone is signing up for new credit cards (and spending thousands of dollars on them) to generate points for first-class flight redemptions and Luxury hotel stay.
But it is not so. Still, I am surprised when a friend or family member pulls out a debit card to pay for a purchase. Even if they’re interested in travel rewards, moving from debit to credit can be nerve-wracking, and I understand that.
Switching from debit to credit was one of my best money moves. My only regret is not doing it sooner.
Related: 4 Reasons Why You Shouldn’t Use Your Debit Card (Except At ATMs)