How To Manage Credit Cards


Hey everyone, it’s Annie Margarita Yang and
today’s video was actually a request from my friend Lingshuang and her
question to me was, “How do you pay your credit card bill?” and I thought, well,
isn’t this a really vague question with a pretty obvious answer because
shouldn’t you just pay your credit card bill in full before it’s due using
sufficient funds from your checking account? Well, I guess she wanted to know
more about whether I have a certain system of managing my credit cards and
the answer is I do. Before I go into the system though, I wanted to share that I
used to be really anxious, especially when I first got my credit card ten
months ago, watching the bill come and seeing a really high balance so what I
used to do was every Friday, which is the day after I got my paycheck I would pay
off my credit card balance so then by the time the bill comes, it’s much lower
than what it should be. And I don’t think I’m the only one who feels anxious
seeing a really high credit card bill– like it’s not even that high–but I got
pretty anxious because my friend and I we had dinner a few weeks ago and she
told me that she does the same thing. She gets really anxious seeing the credit
card bill get really high by the time it comes and she’s always afraid of whether
she has enough money to pay–of course she does–but she feels anxious, so she
pays every week just like what I did. And I don’t do that anymore. I just pay once
a month and I have a certain way of doing things, which is why I’m going to
share with you today. Before I get started though, this is a good system for
you if you already pay your credit card bill in full every month, like you’re
already very disciplined with your money, you know exactly where your money is
going, and you track every single penny. You’re just really aware of where your
money is going. This is not a good system for you if you spend money like it’s
water and you don’t know what is going where. If you do have a problem with
spending money, then I highly suggest you follow Dave Ramsey’s Cash Envelope
System, so you just write the category and how much you’re going to spend,
basically your spending limit, and you put the cash in this envelope. That way
you can visually see a physical limit to the amount of money that you can spend.
Because with credit cards, you don’t visually see that limit. You have to like…
in order to follow a credit card system, you’re going to have to mentally
visualize that limit. And it takes a lot of practice and discipline to be able to
do that, so you might want to start with that first before you move on to
something that’s more advanced and suitable. And also if you do have a
spending problem, please do check out my book, 1001 Ways To Save Money, because
that will definitely help you cut down on your amount of spending. If you’re
concerned that the price is a bit too high at $20.00, then I suggest you buy
the Kindle version for $9.99. Okay so let’s get started with my system. First
of all, you are going to need a checking account and I say this because some
people are underbanked and still do not have a checking account
because they’re scared of the banking industry. You are going to need a
checking account. And I use an online bank called Charles Schwab and they
offer a high-yield investor checking account that offers a 0.4% annual
interest on the average daily balance on your account. So, you know, even though
you’re just spending money like normal, you do get interest on it and I
like that because a lot of banks do not offer interest at all on checking
accounts. And the second thing that you need is a savings account, preferably one
with a really high interest rate. Honestly, a lot of them are not that high.
Lots of banks nowadays offer an interest rate on savings
account of like 0.05%. It’s nothing–almost nothing. So for my savings
account, I use an bank called Ally Bank and their savings
account offers a 2.2% annual interest rate on the average daily
balance of your account. I know it’s really not that high and it’s just high
enough to like barely keep up with inflation, but it’s better than nothing.
I’ve done my research comparing local banks in my area, especially small
community banks and credit unions, and I’ve also done my research on online
banks. And it’s pretty much one of the highest interest rates out there. So you
might want to check it out, but do check whatever is local in your area too. The
third thing that you’re going to need is a budget. You do not necessarily have to
get really detailed and specific with what you’re going to spend your money on
and how much. Recurring expenses do work best and I highly suggest you plan those
out. So in my experience, public utilities such as gas, electricity, water, and trash–they do accept credit cards but a lot of them, they will charge you merchant
processing fee and the amount of the fee doesn’t justify the amount of cash back
or rewards that you’re going to get. So I suggest you just charge those to your
debit card and have it come straight out of your bank account. But for other
recurring expenses that you do need to pay for, not just for enjoyment, but for
day-to-day living where companies do not charge you a merchant processing fee, so
things like groceries, gas for your car, insurance, things like that, you can
charge to your credit card. And you should plan those out because they’re
very predictable, especially the amounts. They’re very predictable on a monthly, or
quarterly, annually basis. And of course you’re going to need a credit card. And
you have to know there’s credit cards credit limit. I read on the internet that
if you want to have good credit or build your credit, never charge more than
30% of a single card’s credit limit on to that card. But I do work for
a real estate firm as an accountant and we have mortgage brokers coming
every single week giving presentations and talking about their various products.
And they suggested that when they look at someone’s application for a mortgage,
they don’t want you to see that you charge more than 10% of a card’s credit
limit onto that card. So you might want to keep that in mind when you’re making
your budget and planning out how much you’re going to charge onto a card.
For this video I’m going to use a monthly net income of $4,000. That’s not
exactly how much we make, but I wanted to use this number because it’s a nice
round number. It’s just perfect for my example, so this is the amount of money
we’re going to get paid here after taxes are taken out. For our savings goals,
let’s say it’s for an emergency fund we’re going to set aside 25% of our
take-home pay, which is going to be $1,000. After that, we’re going to spend
$3,000 for the rest of the month, so 2,000 of it is going to be spent from
the checking account directly, which will be used with a debit card. And $1,000 is
going to be spent on the credit card. Let’s say the credit limit is $10,000.
Then if you spend $1,000 on the credit card, then that’s a credit utilization
ratio of 10% which is just perfect. Over here in my hands, I have $4,000 in fake cash and this is going to be a visual representation of our
paycheck. This $4,000 is going to get deposited straight into the
checking account. What do we do when we first get paid? We transfer the money
over into our savings because we’re supposed to pay ourselves first. So I’m
going to transfer $1,000 of it into our savings account. Now for the
rest of the month, I’m going to spend out of my bank account and out of my credit
card. $1,000 will get charged on a credit card, but I’m not
going to leave$1,000 in my checking account to pay my credit
card later. Instead what I do is I put the $1,000 into my savings account too.
And then at the end of the month, after I’ve tracked all my expenses, after
everything, I transfer the $1,000 back out into my checking account. And then I
pay my credit card balance. The reason I do this is because banks calculate how
much money to pay in interest on your account based on the average daily
balance, so instead of temporarily holding the money in my checking account,
which was reserved for paying my credit card bill, which
I’ve already budgeted for, I hold it in my savings account so that I can
increase my average daily balance throughout the month. And get more
interest money instead of leaving it in my checking account, which has a lower
interest rate. The thing that I want you to keep in mind about my system and my
way of doing things though, is that I do not necessarily pay attention to the
bill’s closing date and the bill’s due date, which I see a lot of people on
YouTube doing. I only pay attention to my budget date, so the last date of my
budget. And we do a four week budget so what I do is on the last day of the
budget period, so on day 28 of our budget, I look at the credit card balance, I look
at everything that’s been charged to the card, compare it to my excel sheet, make
sure that nothing’s been undercharged or overcharged,
everything’s reconciled, no fraudulent charges, then it’s okay to pay my credit
card. And I just pay the balance in full– whatever the balance was on day 28 of my
budget period–so that way, on the 1st of the next budget period, I start fresh
with a zero balance, and then I just do this over again. I really hope that I was
able to explain my credit card management system or whatever you want
to call it in a way that was simple and easy to understand. If you got confused
and I really hope that you do you did not get confused, just leave me a comment
asking me your question and I’d be really glad to answer it in a timely
matter. Again this was a request from my friend, so if you do have requests for
future videos, I’d be happy to take those into consideration. I already have a list
of ideas that I want to make videos on, but I’m always looking for feedback and
for your ideas. I want to know what you want to learn and what you want to hear
so that I can go more in that direction because I am a new channel and I don’t
know what exactly you guys want to watch. If you found the information in my
you know really helpful, then please do like this video, share it with your
friends, and comment below. Remember to subscribe. I don’t just say this for the
sake of it. Again, I am a new channel and I really love the support that I’m
getting to share my passion with you guys and to share my message with the
world, so this really means a lot to me when you guys engage with me. And I will
see you in my next video. Bye guys!

28 thoughts on “How To Manage Credit Cards

  • I understand people using credit cards to get cash back bonuses/mileage, etc. I however prefer the cash envelope system and you nailed it on the spot when you mentioned about seeing a physical limit of how much you have. So many people have debt due to just nilly willy charging things on their credit cards, debit, etc and then wondering how come they don't have the money to pay for certain things. Great video!

  • Very informative. I got rid of my one and only credit card over 5 years ago. My husband and I believe we can’t afford it we need to save for it

  • Really easy to understand and follow. Some great tips you shared with us, Annie!!
    Have you ever done credit card churning, or is it something you would even recommend doing? I've seen a few videos about it on YouTube, and curious to know what your perspective is!

  • Good video. Do you see a balance on your cc bill sometimes paying that way? If so, do they ever charge interest on what is due?

  • 🤣 I also have a Charles Schwab, Ally Bank, and Amazon Credit Card combination. Great topic!

    One recommendation topic you could do: how to budget for your lifestyle. Or Is minimalism for you?

  • Can you teach us about entrepreneurship and different small businesses that you can grow by yourself?

  • I apply credit for petrol rebate.other credit card is to get rebate gsc ticket,which normal price rm15,but using credit card get rebate rm6.so total ticket price just rm9/ticket….so cheap

  • Thank you for this video and your channel. You remind me of myself when I was in college — keeping track of every penny. Here is how I would have answered the (vague) question: Set up your credit card to automatically pay the full balance from your checking account every month. That way, the probability of ever missing a payment is zero and you will never pay any credit card interest. I was a Soldier in the U.S. Army from 1996 to 2016 and deployed to Iraq for most of 2003 and 2010. Especially in 2003, the internet access was barely able to handle text email and I had to wait in line for 30 minutes or more to even get to a computer. There was no wifi at all. So, my credit card had to be able to pay its bill without me. After the 2003 deployment, I liked that arrangement so much that I left it that way. For some credit card companies, you can set this up online. For others, you have to call and talk to someone. I always kept at least a few thousand dollars in my checking account which was more than enough to cover my credit card bill (usually under $1,000). I never worried about checking or savings account interest. Most (95% or more) of my net worth was and still is kept in index mutual funds in investment accounts.

  • A super thanks Annie for this ‘easy to understand’ and very informative video. I learnt so much easily and effortlessly because you made this interesting and fun! I always look forward to your videos and your insights. Finally I really enjoy the way you confidently present your material and how clear you are. Thanks once again!

  • I would LOVE to see a video regarding the excel spreadsheet you mentioned. I’m not very excel savvy so maybe seeing and learning from someone so we know how to create our own to budget would be helpful.

  • Very informative video 🙂 it’s really hard to manage if you live beyond your means and your using your credit card to pay for that lifestyle.. living below your means is the key! Starting Dave Ramsey’s technique too 🙂 thank you for this

  • Because I always procrastinate, I got most of my credit card bills, internet, HOA and utility bills on auto pay. I schedule each of them on a specific date, usually 5 days before the due date and for the balance of that month. That way I don’t incur late fee or interest fee. I just make sure that there is enough money in my checking account. I also review the hard copy statements and reconcile the charges with the receipts I saved to be sure that the charges are correct and no fraudulent charges. If a company charges a fee for merchant services I.e. tax offices, some utility companies, some doctors/dentists,some insurance companies, and the HOA of our condo, and of course credit card companies, then I have auto pay strict from the bank. Those who don’t charge a fee, I put the auto pay charge on credit card. That way I get cash back. My favorite is the Costco Citi VISA card They don’t charge exchange fee on foreign currency exchange. Good when you go out of the country. You can use the ATM machine to get local currency without a fee. There are a few other cards with similar benefits. There’s also insurance on merchandise, accident insurance, auto insurance of car rentals and probably other benefits I don’t know about yet. It pays to do research. Don’t forget sign on bonuses and refer a friend bonuses. There are freebies out there that will boost your financial health for free. Happy savings!,,

  • Credit history is important n Many people don't understand it or how to utilize it…i like your vid n your Awsome way of thinking.thanks for posting

  • I do get a lot of offers but I turned down a lot of them coz I realize that I don't wanna live my life relying on credit cards. I feel like I need more my cash.

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