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There are a lot of credit cards out there that offer cashback and rewards. Should you use them in your budgeting?

If you’re anything like me, you have offers for cashback or reward credit cards. In fact, I regularly use my PC Mastercard for the points that I get. I also take advantage of my RBC credit card that offers Avion points.

They can offer great ways to make more money or to get points for certain items. You’ll want to look through the types of cards that you do get. I love cashback credit cards that put the credit straight onto your card or give you it as a statement credit. I also love points that can be converted for cash to either use on the credit card or on other items.

However, there are some people these cards aren’t suited for. Let’s get into whether you should get one of these cards.

Do you pay off the whole statement at once?

When you get the statement through the mail, what do you do? Do you only pay the minimum payment, or do you add more to the balance?

I pay off the entire statement right away. This is because I only use credit cards on items that I’ve budgeted for. I know how much money I’ll have in my paycheck at the end of the month, and then I use that to clear off the full balance.

The rewards I get are extra bonuses. On the RBC card, I will convert the rewards to $100 every four months or so. It’s not a lot, but it’s an extra $100 from my paycheck that goes into my savings. The PC Mastercard points add up for Thanksgiving, Christmas, New Year, and Easter. I can end up with those four big shopping bills for nothing—well, whatever is between the rounded $10 that you can claim or is alcohol and not included in items I can buy with my points.

If you don’t pay off your whole statement, you’re getting charged interest. That’s going to lead to you spending more money on your purchases than you gain in rewards.

Do you struggle with your budgeting with credit cards?

If you have the money available on the credit cards, will you end up spending it all? Will you max out your cards without a second thought?

There’s no shame in admitting that you do this. It’s something that you can train yourself not to do, but having the reward cards isn’t going to help you. After all, in your mind, you’re getting the rewards for spending the money.

The problem is you’re not going to clear your credit card statement off right away. You end up with interest, and that goes on for months. Those rewards end up being much less than the interest, and you end up with the stress of this credit card to clear.

It’s best just to avoid the card altogether until you get your budgeting and spending under control. Once you learn how to use credit cards effectively, then you can take advantage of these cards.

MORE: Why you need to pay loans bi-weekly and not monthly

Do you struggling with spending on credit cards? What are your budgeting concerns? Share your thoughts in the comments below.

If you’re in Ontario, get in touch so I can help you set up your budget and plan for the future.