Whether its the holiday season or a Tuesday in March, using credit cards often leads people to overspend. A recent Consumer Reports survey revealed that consumers who used credit cards for holiday purchases last year spent about 10% more than those who didn’t. And of those people who used credit cards last year, 13.6 million are still paying off the bill.
There are tons of reasons why people overspend on credit cards. For some, it is a conscious decision to spend more money than they have. For others, however, it can be more accidental. Here are five tips for people who have a tendency to spend more than they should on credit cards:
1.) Use a pad (or an App): When you’re out shopping, set a budget and keep a running tab on how much you are spending. Write down everything you spend on a pad or keep track on your phone. Consider how much money you have and how much you have already spent when deciding to purchase items on a whim.
2.) Price your purchases online: Before you start to shop, add up the costs of your must buy gifts. Subtract this total from your budget and plan on how to utilize the funds you have left to cover all other gifts.
3.) Don’t chase Black Friday deals: Ok, scoring a 50 inch flatscreen for $200 is a sweet deal. But there’s a good chance you won’t be the one who gets one of the five TV’s available for that price no matter how early you get in line. However, once you get in the store, there’s also a good chance that you may buy items you don’t need, or worse, items you could get cheaper online simply because you waited all night and don’t want to come back empty-handed.
4.) Avoid malls and stores: This isn’t the best thing for the economy, but it could be the difference between keeping to your budget and accumulating credit card debt. If you shop online, you can focus on the things you need to buy without being tempted by random gifts and “deals” on items you don’t really need. You can also save money on gas and junk food you might buy while shopping.
5.) Check your credit card balances online: If you don’t keep a budget or a running tab of your spending, you should check your credit card balances regularly. If you wait for your credit card bill to arrive and find that you spent a few hundred dollars more than you can afford, its already too late. But if you log-in to your account every couple of days, you can monitor your spending and cut back on non-essentials to keep yourself on budget.
Final Thoughts
The holidays are the most expensive time of the year and if you pay for them with a high interest credit card loan, you could end up footing the bill for months, if not years.
If you’re the type of person who accidentally overspends when using credit cards, rethink the way you spend. If you go to a store planning to spend $100 and tend to come back with $300 worth of items, stay away from stores and shop online. The goal is to determine the best way to keep yourself on a budget. And if you can’t do that with your credit cards, consider leaving your plastic at home and shop with cash.
For some people, taking on credit card debt during the holidays is a necessary evil. If you must take on debt, create a realistic plan to repay that debt as soon as possible. For example, if you know that you need to take on $1,000 of credit card debt, but can only afford $50 a month to repay it, don’t use a high interest credit card; use a 0% APR credit card that will give you a year to pay down your debt without interest.
Ultimately, it is important to remember that the holidays are about family and friends, not material things. Buy what you need and don’t overextend yourself. Even if you can’t deliver everything on your family’s wish list, they’ll still love you.