Tuesday, October 26, 2010

Rounding Up the Purchase or Transaction Amount

I am seeing more and more advertisements for credit cards or banking services that "round up" purchases, or transactions, and put the rounded up amount into savings.  This is not a new concept.

I have been doing some version of this since the 1980s.  I used to do it with my checking account:  Instead of writing the exact amount of the check, I rounded it up to the next dollar amount.  It made subtracting the amount from the balance easier, and at the end of the month, the money saved could go to savings.  Or, as Lisenby and I sometimes did, we used it as "mad money:" a special dinner out, a special purchase, or whatever.

Later in life, I started doing the same with my credit card:  I subtract all my credit card purchases from my bank balance, as if I am using a debit card.  At the end of the month, when the credit card bill comes due, it is "paid for."  Additionally, I "round up" the charges.  This serves several functions.  One is to allow for putting money aside for savings.  Another is in case I forget to write some purchase in, hopefully the extra will cover the amount. And most importantly, by deducting the amount from my bank balance, I stay within my budget.

I rarely use the credit card for emergency purchases, but when I do, I am grateful that the extra money is in a bank account. I am blessed that way.

I have not had to work on a budget in a long time.  I am thinking I may want to, again. 

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