Tips for Spending Less Money on Your Credit Card Every Month
Americans have a long standing love affair with their credit cards. The amount Americans charge for purchases on their credit cards annually has nearly tripled since 2000 . When used responsibly, credit cards can offer a convenient way to pay for expenses and manage your money. Depending on the type of credit card you have, you could even earn rewards points that you can cash in for things like travel, airfare, or cashback.
On the flip side, credit cards can make it easy to overspend. According to the U.S. Federal Reserve , as a nation we collectively hold around $985 billion in credit card debt.
Ready to take action to curb your credit card habit? Check out these tips to stop using credit cards to help you minimize your credit spending. Everyone’s financial situation is different, and this list is in no way exhaustive of all options out there, but it might be a good place to start.
1. Lowering Your Credit Limit
One potential way to curb your credit use is to lower your credit card limit. The lower the credit limit, the less you’ll be able to charge and the more closely you’ll have to pay attention to your credit card statements.
Note that lowering your credit card limit could easily have an effect on your credit utilization, which in turn may impact your credit score . The general rule is that you want to avoid exceeding a 30% credit utilization ratio.
2. Out of Sight, Out of Mind
Keeping your credit cards out of sight might make it so you’re not tempted to use them. If you decide to do this, consider keeping them in a safe and secure location. You could go as far as to freeze them with the individual cardholder or even shred them. If you don’t have easy access to them, you’ll likely have to take the time to think about the purchase you’re about to make. Instead of making an impulse purchase, you may be forced to evaluate how much you actually want or need the item.
3. Carrying Cash Instead
Instead of relying on your credit cards, you could plan out your monthly budget and carry the cash you will need to make your weekly purchases. Cash can give you a good visual representation of how much money you’ve spent and you’ll know immediately when you’re getting close to your spending limit. When the money’s gone, you can take that as a sign to stop spending for the week.
4. Staying Away from Spending Triggers
If you know you can’t walk into a store without leaving with a treat for yourself, consider minimizing the number of times you go to the store. Eliminating known spending triggers is considered to be helpful when trying to get credit card debt under control.Another common spending trigger? advertisements .
You might want to unsubscribe from promotional emails that are tempting you with a 20% off coupon. If you don’t need a new pair of shoes then you’re not really getting a great deal—you’re spending money on something you don’t actually need. If Instagram influencers and promoted posts are persuading you to spend money, you can unfollow them. You could also mute the commercials when you watch TV so you’ll be less focused on the content.
5. Planning for Emergencies
One driving factor behind credit card debt in the U.S. is lack of financial preparedness for emergencies. Instead of having an emergency fund, some people rely on credit cards to float them through unexpected financial issues. One in three consumers with credit card debt attributed it to emergencies.
If you don’t have an emergency fund yet, you could start saving for one now. Then, when future financial emergencies arise you’ll be better prepared and won’t have to rely solely on a credit card to get you through.
More Tips from Twitter
We asked for some additional tips that our Twitter followers had for curbing their own credit card spending. Here is what they had to say:
“Stays in the safe. It’s paid off, and for emergencies. If we don’t have it, we don’t spend it.” – @wendykrafferty
“I leave my credit card at home and just have cash for the day.” – @ladyedlynn23
“It’s definitely hard to keep my spending down but i do try to not look at the ads on [Instagram] and that has helped tremendously.” – @van45859591
“I make sure I have a shopping list and a budget so I don’t overspend.” – @JessicaStaley10
“I buy in bulk when possible so that I don’t have to buy a snack or a drink every time I get the urge to have one. I already have them in the pantry.” – @Pail_Banker
Getting Ahead of Your Credit Card Debt
Curbing your credit card use can be the first step in helping you eliminate your credit card debt. Understanding your spending triggers and knowing how to prevent yourself from racking up additional debt can go a long way in helping you take control of your credit cards.
As you start to cut back on your credit card use and spending in general, you might consider putting the money you’re no longer spending toward your credit card debt. Making additional payments could help you accelerate the repayment of your credit card debt. Thanks to their well known high interest rates, credit card debt can be notoriously difficult to pay off.
One of the first steps in eliminating your credit card debt is to create a debt repayment plan. You can do this by determining how much you owe and how long it will take you to repay your credit card debt.
After you’ve determined the total amount of credit card debt that you owe, you can review your other financial documents and set a monthly budget. Then stick to it. While you’re at it, you might want to set some long- and short-term financial goals. If you want to get a jump on your financial goals and planning, you can schedule a complimentary 30-minute call with a SoFi Financial Planner. Working toward a goal like buying a house or saving for retirement could help you put your spending into perspective, and advice from a qualified financial planner can help you develop a strategy to help you reach your financial goals.
Another option to help you get your credit card debt under control? Consolidate your debt with a personal loan. You might qualify for a lower interest rate than the one you’re currently paying on your credit cards. To get an idea of how much you’re paying in interest on your credit card debt, take a look at our credit card interest calculator. Then, you might try using our personal loan calculator to see how much money you could potentially save in interest if you qualify to consolidate your credit card debt with an unsecured personal loan.
If you’re currently paying off multiple credit cards, a debt consolidation loan could make it easier for you to manage your monthly payments. Instead of paying multiple bills with different due dates, you may only have to track one monthly payment. When you borrow a personal loan from SoFi, there are no origination fees or prepayment penalties. As an added bonus, you’ll also have access to exclusive events and other member benefits.
The information provided is not meant to provide investment or financial advice. Investment decisions should be based on an individual’s specific financial needs, goals and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC .
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .
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