5 tips to stop spending too much on your credit cards

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Overspending on your cards could spell financial disaster.


Key points

  • Credit cards can be a valuable tool that helps you build credit and earn rewards.
  • However, overspending on your cards can be a disaster, as you could end up with high interest charges.
  • You can avoid overspending by following a budget, shopping to a list, etc.

Using credit cards can be a positive thing if you do it the right way. Your cards can help you get a good credit rating if you show that you can use them responsibly. But if you overspend on your credit cards, it can be a financial disaster.

The cards have high interest rates, making them a very expensive way to borrow money if you don’t pay off your balance in full. And the minimum payment on them is low, so it’s easy to get stuck in debt for years if you don’t pay more than the required amount.

The good news is that there are ways to stop overspending on your cards so you can take advantage of the credit building features they offer. and so you can earn the rewards offered by many cards. In fact, by following these five tips, you can hopefully limit your spending on your cards to the amount you’re able to repay in full each month.

1. Set a budget

If you’re on a budget, you’ll know exactly how much you can afford to spend on every type of purchase, from groceries to entertainment. You can ensure that your budget does not exceed what you can afford to pay each month.

If you do, and you stick to your spending limits, you can use your cards for as many purchases as possible to maximize your rewards and you’ll always know you have the funds to pay your balance to $0 and avoid charges. interest due.

2. Track your spending

It is important to keep track of what you spend. This has a few advantages. First, by tracking where your money is going, you can make sure you’re staying within your budget and not accidentally overcharging. Second, you’ll be more likely to think carefully about a purchase if you have to write it down while tracking expenses, so you’ll be less likely to mindlessly reach for the cards and buy things you don’t have. no need.

3. Sign up for account alerts

You can usually sign up for alerts from your credit card company, including those that will tell you if you’re spending too close to your credit limit. If you pay attention to these alerts when they arrive, they can help you realize that it’s absolutely time to stop spending.

As a general rule, you’ll want to make sure to keep the amount you charge below 30% of your available credit line to avoid hurting your credit score. Although your credit card company doesn’t offer the option to set an alert when your spending exceeds this amount, you can use third-party apps that allow you to set a budget and get notified when you go over it.

4. Shop with a listing

If you’re going to buy anything with your credit cards, start by making an exact list of what you need to buy and stick to it. This helps reduce the likelihood that you’ll end up charging something you can’t really afford.

5. Institute a 24-hour rule

Finally, you’ll want to reduce impulse spending on your credit cards — and setting a 24-hour rule can help. With this rule, if you see something you want, you agree to wait 24 hours to buy it. During this waiting period, you will have time to think about whether the item is really worth paying for and whether you can really afford it.

By following these five tips, you can ensure that you don’t overspend on your cards to avoid the high interest charges that make credit cards a problem.

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