We’ve left “quiet luxury” behind in 2023. But do you know what’s in for 2024? “Loud budgeting.”
Loud budgeting is the latest TikTok trend, popularized by creator Lukas Battle. The concept takes quiet luxury—the lifestyle popularized by celebrities in which you splurge on expensive everyday items or investment pieces—and flips it on its head. Loud budgeting motivates everyday consumers to make smart spending decisions that align with their personal money goals. Simply put by Battle: “It’s not ‘I don’t have enough,’ it’s ‘I don’t want to spend.’”
This financial way of being can manifest in many ways: Taking public transit instead of ordering a rideshare? Making your daily coffee at home? Maximizing cash back on purchases and building your credit history using credit cards? Now, that’s loud budgeting!
If you’re falling behind on the financial resolutions you set at the top of this year, here are actionable ways you can start loud budgeting using the credit cards in your wallet.
Find the Best Credit Cards for 2024
No single credit card is the best option for every family, every purchase or every budget. We've picked the best credit cards in a way designed to be the most helpful to the widest variety of readers.
1. Use Credit Cards To Get Cash Back on Every Purchase
Even if you are not a credit card expert, you are likely aware that credit cards offer rewards, typically in the form of cash back or points. The best cash-back credit cards offer a base 1% to 2% cash back on all purchases or even up to 3% to 5% cash back in select spending categories, like dining, groceries, gas and more.
In order to maximize the cash back you earn on credit card purchases, you need to follow one golden rule: pay off your credit card on time and in full. If you do not pay off your card in full and end up carrying a balance month-to-month, the interest fees you’ll end up paying will outweigh any rewards you earn on the card.
However, if you are truly embracing loud budgeting and only buying these essentials, putting these purchases on a credit card can allow you to accumulate rewards quickly. Say you spend $100 on groceries each week using a card that earns 3% cash back in this category. After a year of grocery spending totaling $5,200, you’d earn $156 in cash back, which covers more than a full week of groceries. Loud budgeting? We think so.
Read more. How To Choose a Cash-Back Credit Card
2. Time a Large Purchase To Earn a New Card’s Welcome Bonus
Another feature you’re bound to find on a credit card is a welcome offer. Frequently this involves earning bonus cash back or points after putting a certain amount of spending on your card within an allotted time frame.
For example, a card like the Chase Sapphire Preferred® Card offers a welcome bonus of 75,000 bonus points after spending $4,000 on purchases in the first three months from account opening.
Now let’s say you’re flipping through your credit card statements and realize that you always spend the most each year from October through December, due to the holidays, traveling and day-to-day expenses. Applying for and receiving the Chase Sapphire Preferred at the start of October could allow you to receive a sizable amount of rewards in exchange for spending you were going to make anyway in the following three months.
You can then use these bonus rewards, whether cash back or points, toward a big-ticket purchase or travel expense. Nothing says loud budgeting more than posting your first-class flight on Instagram that you booked for almost free using rewards.
Nevertheless, it’s important to note that timing is of the essence with this tip. You should never overspend just to reach a welcome bonus requirement. With some clever timing, though, you may be able to meet a spending threshold using your typical spending.
3. Use a Promotional 0% APR To Avoid Paying Interest on a Large Purchase
Another way to use credit cards to your advantage when big purchases or spending periods come around is to take advantage of a promotional 0% APR offer.
Many people use credit cards as a last resort to pay for expenses they don’t currently have the cash to cover. This results in paying even more over time, as double-digit interest can accrue for carrying a balance month-to-month. 0% APR credit cards offer a solution by providing an introductory 0% interest period on purchases, balance transfers or both. In short, these cards can help you pay down a balance without accruing interest during the intro period.
Let’s put this into context: a card like the Wells Fargo Active Cash® Card offers a 0% intro APR for 15 months from account opening on purchases and qualifying balance transfers, then a 20.24%, 25.24%, or 29.99% variable APR applies. Balance transfers made within 120 days qualify for the intro rate and fee of 3% then a fee of up to 5%, with a minimum of $5 applies.
Now let’s say you are moving within the next few months and are anticipating a variety of expenses you don’t currently have the cash to cover. Opening a 0% APR credit card to use for these purchases can grant you some extra time to pay down these expenses, as long as you know you’ll have the cash in the near future to wipe out this debt.
As with any 0% APR credit card, keep in mind that you must pay your balance off within the promotional time period to avoid paying interest. If you don’t pay off your balance in time, you’ll be hit with your card’s normal interest rate. In the era of loud budgeting, let’s plan on not paying interest at all.
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4. Set Intentional Spending Limits for Yourself
Since my credit card has a $3,000 credit limit, there’s no harm in spending up to my limit, right? Not quite.
When you get approved for a credit card, it may be tempting to start making big purchases under the internal promise that you’ll pay the balance off in the future. Running up your balance to the top end of your credit limit can be damaging in two ways: You’ll end up paying a ton in interest, and you’ll increase your credit utilization, which can be detrimental to your credit score.
Credit utilization—the ratio of the amounts you currently owe to your total credit limit—is weighed heavily in the calculation of your FICO Score. To see a positive impact on your credit score, it’s recommended to keep your utilization as low as possible, or at least below 30%. For example, on a credit card with a $3,000 limit, keeping your utilization below 30% would mean keeping your balance under $900.
A great way to keep your credit utilization in check is to set intentional spending limits for yourself. Take a look at all of your credit card accounts, calculate what 30% of your credit limit is and use that amount as your own personal limit.
By setting intentional spending limits and keeping your credit utilization low, you’ll get in the habit of paying off balances in full, and you could see a positive impact on your credit score. Higher credit scores could help you qualify for a better interest rate for a mortgage, car loan or personal loan. This aligns with loud budgeting by reducing the amount of money you spend on interest fees.
Bottom Line
Although it may seem trendy, loud budgeting is a mentality that could actually empower you to reach your money goals. Specifically in regards to credit cards, anyone can incorporate loud budgeting into their life by building habits that maximize rewards, build their credit score and minimize interest charges.
Find The Best Cash Back Credit Cards Of 2024
