When you write down your expenses, does it matter if you pay in cash or by credit card?
The answer is NO. Whether you pay in cash or by other means, the expense remains the same. For example, when you go to the supermarket to buy meat, vegetables, fruits and canned goods, and you use your credit card to pay, there is no cash outlay on your part, at the moment, but you carry the goods with you. You are now a debtor of the card company, which will bill you for the purchases you have made using their card, on a later date.
This means that credit card payments are not accounted entirely as expenses, only the portion of payment for finance charges are recorded. Finance charges are the expenses that you incur for using the credit card, and not paying the whole outstanding balance in full.
Writing down the entire payment to the credit card company as expense will double up the purchases which you have previously taken up before. The redundancy will result to bloating up of expenses and will definitely affect your prepared budget.
