Five Ways to Curb Credit Card Spending

Credit cards are such a ubiquitous part of life these days, it’s hard to imagine life without the ease and convenience they afford. For many consumers, however, credit cards also carry a downside—they make it easier to overspend.

With the tight economy and job conditions today, many find it necessary to curb spending, and part of it is to find ways to control credit card usage due to the temptation the available credit offers. Some consumers experiment with leaving their credit cards in the drawer and live on cash only. While this may help prevent impulse purchases, having to carry cash for every single purchase is a lot of extra hassle—and in many cases, simply not practical. Taking cash out of the ATM on the fly isn’t the ideal solution either, as the fees may add up over time.

The problem with overspending really doesn’t lie in the credit cards, but with how you use them. So instead of quitting credit cards cold turkey, try these tips to curb credit card spending.

1. Know how much you can spend. The first step is the hardest, but also the most important. Make a budget of how much you can spend in each category of expenses and still be able to pay off your credit card charges in full at the end of the month. Use this as a guideline for how much you can spend each time you go shopping.
2. Make a shopping list and stick to it. Based on your budget, make a list of what you need (and can afford) before you go shopping for groceries, clothing, or any other consumer item. This will help you avoid impulse spending when you go shopping. If you are tempted to purchase something not on the list, wait for at least 48 hours. You can always pick it up on your next shopping trip, after you’ve had time to think it over.
3. Only go shopping when you really need to. The less often you go shopping, the less tempted you’ll be. Try to go shopping for groceries only every 4 to 7 days. Postpone shopping for clothing and other items until you’ve saved enough money that you can pay off the credit card charge at the end of the month. You’ll be surprised how you find ways to use items that otherwise have just been sitting in your cupboards or closets.
4. Take advantage of returns. If you do get tempted and buy something you didn’t plan, take another look at it when you get home. You may find that you didn’t need it as much as you thought when you were in the store. So simply keep your receipt and return it to the store when you get a chance.
5. Watch out for emotional spending. One of the reasons we tend to impulse spend is because buying something makes us feel all warm and fuzzy inside. If you make an impulse purchase every now and then, it’s no big deal. However, if shopping has become a way to make you feel happy and forget about the things in your life that bother you, it’s a red flag. Take a closer look at your underlying motives, particularly if you are spending more than you earn. If your shopping habits are causing you financial hardship, you may want to seek the advice of a trusted friend or even a professional coach or advisor.

Published: May 22, 2009