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How I treat credit cards like debit cards: The updated envelope system

July 17 2022
4 min read
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Juggling a mountain of credit cards can be a tough task. You'll want to keep close track of things like spending requirements across all of them, payment due dates and which credit card is the best for each spending category. It can be a lot to handle.

My wife and I each have more than 20 credit cards. With all of these credit cards, it might seem like I could lose track of how much money I'm spending and blow my budget for the month. In order to avoid that problem, I treat my credit cards like debit cards. Let's look at what I mean by that and how it could help you juggle your many credit cards.

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The envelope system — but modernized

(Photo by RonBailey/Getty Images)

I'm not the biggest fan of Dave Ramsey. However, the envelope system for budgeting isn't a bad idea. I've adapted this with a modern twist since I prefer digital approaches to everything and want to use credit cards for my spending. This allows me to earn rewards that I use for travel (I've been to 170 countries and counting).

Instead of an envelope with cash in it, I use two separate checking accounts. For simplicity, let's call them Account A and Account B.

Account A is where I receive money. When my wife and I make deposits, receive our paychecks or sell some old items on eBay, all incoming money goes into this account.

We make our payments from Account B — sort of. Since we use credit cards for all possible spending to earn rewards, I don't want to lose track of how much we've spent during the month across these many credit cards. Every few days, I look at our receipts and recent spending. Then, I move that amount of money from Account A into Account B. In this way, the money is set aside to cover bills we need to pay at the end of the month (things like rent and utility and credit card bills).

Related: Off-the-wall things my family has done to earn more points and miles

A glance at Account A tells us how much money we have left this month. Account B has money that we can't spend (it's not attached to our ATM cards for withdrawals) and is ready to cover our financial obligations for the month. In short, when a bill is due, I pay it from Account B.

How my credit cards function like debit cards

By moving money into Account B for what we have already spent on our credit cards that month, we know we can pay the credit card bills. We also know how much we have left in Account A.

Debit cards work in a very similar way: They instantly subtract money from the linked checking account and you can't spend what you don't have. (Note: Some banks will allow you to overdraw your account, but that's a different discussion.)

Related: 4 reasons why you shouldn’t use your debit card

By using two checking accounts, I can treat my credit cards like debit cards to avoid overspending. This works for me since I'm personally not able to remember exactly how much we've spent across all of our credit cards throughout the month. Dedicating 15 minutes or so to add it up every few days and transfer that money from Account A to Account B helps me pay bills at the end of the month, knowing the money is there to cover them.

Related: Why a credit card is a smarter choice than a debit card

Bottom line

As you get into the points and miles hobby, juggling numerous credit cards can seem daunting. You use one card at restaurants, another card at supermarkets and a third card for filling up at gas stations. Keeping track of how much you've spent across those cards each month can be tricky and might lead to overspending.

By modernizing the envelope approach and using two checking accounts, you can use your credit cards like debit cards. This ensures the money you've spent is set aside, ready to pay the credit card bills at the end of the month.

A different, more rigid way to prevent overspending is to use the envelope system with prepaid gift cards, which still earns you points and miles.

Featured photo by Olleg/Shutterstock

Featured photo by Shutterstock
Editorial disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

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TPG Editor‘s Rating
Card Rating is based on the opinion of TPG‘s editors and is not influenced by the card issuer.
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Rewards Rate

6X6x points at hotels participating in the Marriott Bonvoy® program.
4X4x points for purchases made at restaurants worldwide, at U.S. gas stations, on wireless telephone services purchased directly from U.S. service providers and on U.S. purchases for shipping.
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  • Intro Offer
    Limited Time Offer: Earn 100,000 Bonus Marriott Bonvoy Points after spending $4,000 in purchases on your new Card in your first 3 months of Card Membership. Offer expires 11/2/22.

    Limited Time Offer: Earn 100,000 points
    75,000 points
  • Annual Fee

    $125
  • Recommended Credit
    Credit ranges are a variation of FICO© Score 8, one of many types of credit scores lenders may use when considering your credit card application.

    670-850
    Excellent/Good

Why We Chose It

The Marriott Bonvoy Business Amex is a stacked card with a rewards rate that will help you earn bonus points on everyday and business-related purchases. You'll earn 15 elite night credits each calendar year, and receive automatic Gold elite status. Finally, the free night award certificate with a redemption level of 35,000 points or less can get you hundreds of dollars in potential value each year.

Pros

  • 6x points on eligible purchases at hotels participating in the Marriott Bonvoy program
  • 4x points at restaurants worldwide, U.S. gas stations, wireless telephone services purchased directly from U.S. service providers and U.S. shipping
  • 2x points on all other eligible purchases
  • Earn a free-night award each card renewal month (up to 35,000 points)
  • Receive 15 elite night credits to jump-start status
  • Transfer Marriott points to 40+ airlines

Cons

  • Airline points transfer ratios are poor
  • Must spend $60,000 in a year for second free-night award
  • Limited Time Offer: Earn 100,000 Bonus Marriott Bonvoy Points after spending $4,000 in purchases on your new Card in your first 3 months of Card Membership. Offer expires 11/2/22.
  • 6x points at hotels participating in the Marriott Bonvoy® program.
  • 4x points for purchases made at restaurants worldwide, at U.S. gas stations, on wireless telephone services purchased directly from U.S. service providers and on U.S. purchases for shipping.
  • 2x points on all other eligible purchases.
  • Receive a 7% discount off standard rates for reservations of standard guest rooms at hotels that participate in the Marriott Bonvoy program when you book directly. Terms and Conditions Apply.
  • Receive 1 Free Night Award every year after your Card renewal month. Plus, earn an additional Free Night Award after you spend $60K in purchases on your Card in a calendar year. Awards can be used for one night (redemption level at or under 35,000 Marriott Bonvoy® points) at hotels participating in Marriott Bonvoy®. Certain hotels have resort fees.
  • Enjoy Complimentary Marriott Bonvoy Gold Elite Status with your Card.
  • Terms apply.
  • See Rates & Fees