Woman using a chip credit card reader
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Some savvy consumers use their credit cards for everything from a new fridge to a pack of gum, and pay the bill in full each month and reap big rewards. However, without the proper controls in place, you could find yourself loaded down with more debt than rewards points.

If you’re disciplined, running as many monthly expenses as possible through a card can pay off big time.

But charging every possible purchase can backfire for cardholders who are new to budgeting, have little in the way of emergency savings or who aren’t in a habit of keeping their charging in check.

Considering continuous charging? Get a system

If you don’t yet cycle all purchases through a credit card but are considering doing so, do you have a system in place to track your spending to keep from overspending?

Technology allows us to constantly monitor checking and savings account balances online. However, credit card statements are monthly events. You need to put in place a system to track when the money is coming in and where it is going out, and to reconcile those frequently.

Spending today with a plan to pay tomorrow can muck up your money management, says Pam Horack, a certified financial planner also known as “Your Financial Mom.”

If you run all expenses through a card, she says, “You are always one month behind on your finances.” When you log into your checking or savings account, you might get tricked into thinking you have “extra” money when it’s actually already spent because you owe it to the credit card company.

Using credit at the store also makes it easier to spend more on a regular basis, says William Davis, a certified financial planner at JRB Wealth Management. “Credit cards enable and encourage people to overspend,” he says.

Spending by credit card dulls the pain of parting with cash, studies say. One study found consumers were willing to spend $175 to throw a hypothetical party when using a card, but only $145 when paying with cash. Research also shows grocery shoppers paying with credit are more likely to make impulse buys.

So, drill it into your mind: Do not chase rewards with unnecessary spending. Spending so much you end up paying interest or even late payment fees is a loser’s game.

Going all-credit is bad if:

It’s probably a bad idea to start putting all your expenses on credit if:

  • You are a budgeting newbie. “People just starting a budget probably need to be very conscious of what they’re spending,” says financial psychologist and author Kit Yarrow.
  • You slip up repeatedly with money. Anybody who seems to always have more month than money should not run all expenses through credit. “If you’re missing the mark frequently, you shouldn’t be doing this,” Yarrow says.
  • You have a low credit limit. If you’re new to credit or are rebuilding your credit, and have only one or two cards with low credit limits, charging everything can lead to maxed-out cards. That can drag down your credit scores.
  • You carry a balance. The key to successfully putting everything on credit is to pay off the balance in full every month, no exceptions. If you don’t do it now, you won’t pay in full when your bill is even bigger.

Another word of caution: Some credit card users start with the best intentions, even setting up an automatic payment from their checking account to ensure the bill is paid in full every month, Davis says.

“Then they stop the automatic payment and begin to slowly let the balance creep up,” he says. “Before you know it, they have $10,000 or $20,000 in credit card debt.”

How the pros do it

If you’re ready to make the switch from debit to credit without ending up in debt, follow these five tips:

1. Stick to a budget. Make sure you have a budget and have demonstrated an ability to spend less than you earn.

For example, Marcia Noyes, a communications director in New Braunfels, Texas, has been putting everything on credit for years. To track her expenses, she faithfully uses a spreadsheet.

“I record every penny spent, found or made in a variety of categories,” Noyes says. “At all times, I know if I’m spending more than I’m making, and can adjust.”

2. Treat credit more like cash. Take steps to remind yourself that you’re spending actual money, Yarrow says.

If you’re old-fashioned, put a sticky note on your card with the total amount you can spend that month, then record each purchase and subtract from the total. Or use an app such as Debitize, which subtracts your daily credit spend from your checking account, sets aside that money and pays your credit card bill in full at the end of the month.

3. Check automatic payments regularly. When you put everything on credit, it’s easy to forget about payments for services or subscriptions you no longer need.

Review automatic payments run through your card at least yearly. “Think about whether you really need all those channels or use all that data,” says Yarrow.

4. Watch for card surcharges. Some service providers might add a credit card convenience fee to your bill that cancels out any rewards. In these cases, it might be best to write a check.

5. Keep an eye on your credit use. Depending on when your card company reports to the credit bureaus, it can look like you’re carrying a hefty balance even when you’re paying your bill in full each month.

It’s smart to keep your credit utilization as low as possible. If necessary, you can keep your balance in the target range by making multiple, even weekly,  payments on your credit card each month, she says.

The bottom line: Putting everything on a card can be rewarding, but it works well only if you’re disciplined about credit card use.

See related: Side gig can be best debt-payoff optionCharged Up! podcast: Get a financial life

Editor’s note: This story, “Using credit cards for everything has risks, rewards” originally was posted on CreditCards.com.

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