A Real Budget simplifies the management of credit cards by supporting a four-step approach for handling credit card activity. The consistent advantages of this four-step method are:
- not paying any interest or fees;
- avoiding having to pay fraudulent charges;
- always knowing how your charging activity is affecting your finances.
The four steps are:
- Remember what happened - Always get or have some kind of receipt for charges and refunds that you authorize. When you buy or return something with a credit card always get or make a receipt. It doesn't matter what form a receipt might take: paper, email, hand written note, a spreadsheet, etc. The point is that you have accurate reminders of all of the activity on your credit card that you authorized.
- Update charging activity and scheduled payments in your budget - When convenient, add new charging activity in the Budget Space. After adding activity, adjust your scheduled credit card payments to fully pay for new charges. Doing so will show you immediately how your charging activity is affecting your Budget.
Save receipts as they may be needed in step 3.
- Validate charging activity - Reconcile credit card statements as soon as possible after receiving them each month. Dispute any fraudulent charges that appear on a statement within 60 days of the statement date to avoid having to pay the bogus charges. How to contest charges is printed on the back of each statement.
- Avoid paying late fees and interest - Pay the statement’s new balance each month in full on or before the payment due date.