How My Credit Card Rewards Help Me Avoid Overspending

by Maurie Backman | Updated July 21, 2021 - First published on Feb. 10, 2021

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A woman holding shopping bags with her hand over mouth.

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This simple trick is my ticket to avoiding impulse buys.

Like many people who have multiple credit cards, my goal in opening new ones is to make sure I'm signing up for great rewards programs. One of my credit cards, for example, gives me extra cash back at the pump. That's a good thing because my family normally takes a cross-country road trip every year and does a bunch of local travel, too. Another card of mine gives me extra cash back at my local warehouse club where I do a lot of shopping for staple items like produce and cleaning supplies.

Not only do I enjoy racking up credit card rewards, but I also have a very specific system for putting mine to good use. In fact, my strategy actually helps me avoid overspending and wrecking my financial goals in the process.

It's all about treating yourself

We all have our little things in life that make us happy. For some people, it's takeout or gourmet coffee. For others (me), it's books and chocolate. While I do have a little money worked into my monthly budget for indulgences, I try to keep that spending category to a minimum because I know surprise expenses have a way of creeping up. And when they do, I generally prefer to cover those with my paycheck rather than raid my emergency fund. But I do often manage to enjoy extra treats beyond what my budget allows thanks to my credit card rewards.

The cash back I get from my credit cards isn't money I earn from a job or depend upon. So I figure it's mine to use as I please rather than having to save or apply it to existing bills that my paycheck is already covering. And having that extra treat money, so to speak, actually helps me avoid falling victim to impulse purchases or overspending.

When I'm tempted to buy something out of the blue, I check my rewards balances on my credit cards. If I have enough cash in that pot to cover whatever the item is, I can move forward without guilt. If I don't, I make myself put that purchase on hold. It's a system that's kept me in check for a long time but also allows me to treat myself without worrying about any sort of financial backlash.

Of course, you could argue that there are better uses for credit card rewards points or cash back. I could use that money to pad my savings or, as mentioned earlier, pay other bills. But right now, I have a solid emergency fund. I also don't have any debt other than a mortgage, which is a reasonable expense to bear. As such, I don't see any reason why I can't treat my rewards as fun money that's mine to spend.

To be clear, I also use my credit card rewards to treat my family to things. For example, I'll sometimes let my kids choose new books or a board game to share as a reward for being extra helpful around the house. But either way, those reward points have really helped me manage my money. So I'm grateful to have found a number of credit cards that are a good fit for my lifestyle and spending habits.

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