More and more of our spending is done through the use of credit cards since they are more convenient to use than cash or checks. Yet it seems that we are spending more and have less of a handle on our financial situation than when we used cash and checks. Do you have any suggestions?

You’ve made an important observation. As technology in our society advances, the methods we use to pay our bills will change. Who would have imagined online banking a few years ago?

What does the increased use of payment cards mean for you? Remember that payment cards are just a means of handling part of your finances. There is nothing inherently wrong with using a payment card. The key is to use them properly. Here are a few tips.

One of the first decisions you’ll need to make is whether you want to use a credit card or a debit card. My personal preference is to use the credit card (which may surprise many of you), since the transaction isn’t automatically deducted from the bank account. As a result, you continue to earn interest on your funds (although this will typically be very modest), and the administrative work related to managing the checkbook is reduced.

A deciding factor in your choice of a credit or debit payment card should be whether you will maintain the spending discipline necessary to ensure you will pay the full balance of a credit card off every month. If you have had a problem with this in the past, or haven’t yet developed an effective budget, it may be best to stick with the debit card to avoid a buildup of consumer debt. If you decide to use a debit card, don’t accept an overdraft privilege on your account. Using an overdraft is just like not paying off your credit card every month.

Whether you choose a credit or debit payment card, it continues to be important that you manage your spending on the cards in the context of a financial plan or budget. The use of payment cards requires a minor adjustment in tracking of expenses in the budget. Since you receive one bill at the end of each monthly billing cycle with what may be a large number of transactions, you’ll need to summarize those transactions by the expense categories in your budget. I use a numbering system. All grocery items are coded with “1,” gasoline expenses get a “2” and so on. When done coding, I total the amounts by category and transfer the account totals to our individual transaction registers.

The key to managing spending given the increasing use of payment cards is to have a proper budget and keep the spending on the card in line with the budget.

God love you!

Phil Lenahan is president of Veritas Financial Ministries

and author of 7 Steps to Becoming Financially Free. Sign up for his free monthly e-letter at