The best thing about credit cards is also the worst thing about them: they’re incredibly easy to use. There’s no pausing to count out cash,or doing mental math to figure out whether you’ll be hit with an overdraft fee—just swipe, swipe, swipe and deal with the bills later.
Many people struggle to cut their credit card spending for exactly this reason. It’s hard to forgo the most convenient and friction-free payment option in your wallet. The problem is, of course, that when those bills do finally come, you might discover you’ve been spending beyond your means.
Americans hold almost $1 trillion of credit card debt, and the average household owes around $8,000. Whether you’re trying to pull yourself out of debt or merely trying to avoid it, limiting your credit card spending may be an important part of your budgeting strategies.
Luckily, there are some common sense tips and tricks that can help you reign in your use of plastic. I spoke with with Kelly Luethje, a Certified Financial Planner and founder of Willow Planning Group, to find out what advice she gives clients who are struggling to limit their credit card spending.
Reduce the number of cards you use
The first step to taking back control of your spending is to take stock of what’s actually in your wallet. Luethje suggests making a list of all the credit cards you have open along with each one’s interest rate, credit limit, and annual fee; the balance you’re carrying on it; and any perks like points or miles.
The first step to taking back control of your spending is to take stock of what’s actually in your wallet.
This can help you decide which cards to keep using and which to stash away in the back of a drawer—or cancel entirely. Cards you rarely use should be prime candidates for elimination, especially if they carry annual fees.
Many people are afraid to cancel credit cards because it will ding their credit score. However, depending on the length of your credit history, a cancellation may not have much of an impact, Luethje says. And while you don’t want your credit score to tank, it’s not worth obsessing over small fluctuations unless you’re planning to make a major purchase, like a house or a car, soon.
“If your goal is to curb your credit card use and spending, then focus on that first,” Luethje says. “Repairing credit is the next step.”
Apply a spending limit
If a card you’ve been swiping too much has perks you love—whether they’re airline miles or cash back—consider limiting your spending to a specific amount that you know you can pay off each month.
“If you’re approaching the limit or even halfway there, you can begin making active decisions on how you spend your money,” Luethje says.
For example, if you’ve already spent $350 out of your $500 limit on the 15th, you might think twice about splurging on a $150 dress and using up your entire credit allotment for the month. It may help to actually put a sticker on the card reminding you of the limit so you don’t “forget” and overspend.
This approach only works if you check your balance daily or at least weekly, so make sure logging into your account is frictionless and easy. Consider downloading the bank’s mobile app if you haven’t already—that way you can check on the go.
Use a card for certain types of expenses
If obsessively tracking a balance doesn’t sound like your style, you can try limiting your credit card use to only certain fixed expenses. Try setting up automatic payments for monthly, recurring bills, including utilities or subscriptions like Netflix. That way “every month you know pretty much what the charge is going to be, and that you’re going to pay it anyway,” Luethje says.
Then, when you go shopping outside the house, bring only a debit card or cash.
Disconnect cards from online shopping sites
It’s hard to imagine life without online shopping, especially if you belong to one of the many households who rely on sites like Amazon for the delivery of necessities like paper towels and laundry soap. For many people, however, the ease of one-click ordering is an invitation to massively overspend.
If that sounds like you, you may want to delete your credit card information from e-commerce sites and/or your internet browser so that when you do want to make a purchase, you have to type the numbers in manually. Sometimes adding that extra step can discourage excess purchases, Luethje says.
Removing online shopping sites from your bookmarks and your browser history might help remove temptation as well.
Go cash-only for a few months
The thought may seem terrifying. But if you switch from a credit to a debit card, you may still swipe too much and get hit with expensive overdraft fees. Going completely cardless may be
just the strategy you need. Paying in cash tends to drive home what things really cost, so it can help even the most committed shopaholics reign in spending. It also forces you to acknowledge exactly what you’re spending money on, and how much.
After you’ve stuck to a budget for a month or two, you can start reintroducing credit cards to your life, keeping in mind the tactics described above. But old habits die hard, so proceed with caution.
Cutting back on your credit card spending can be a challenge but you can do it! Don’t let plastic be your master.