5 Signs That Your Credit Card Spending Is Out of Control
How good are you at staying on top of your credit card spending? Credit cards are a convenient financial tool that many of us prefer to use in lieu of cash, but they can become a thorn in your side if you’re not careful. To determine how disciplined you are when it comes to spending with plastic, it may be a good idea to do a self-assessment. Here are five signs that your self-control goes out the window when it comes to buying stuff with your credit cards. If any of these signs seem familiar to you, then it’s time to sit down and give yourself a good talking-to.
You can't leave the house without your credit cards.
This may be a sign that you are overly dependent on your cards, and that you've grown inured to a certain level of spending. Do you really need a credit card every time you pop into town for a quart of milk? When you carry your card around, it's easier to succumb to spending temptations that can add to your card balance. Try leaving it behind once in a while and see if doing so has a positive effect on your card balance and even your spending habits. You might be surprised by the results. (See also: 6 Reasons Why Cash Is Still King)
Every single thing you buy has to be bought with your credit card.
Have you fallen for the pitch that you should put all your financial transactions on your credit card? It's a good thing if you have a rewards credit card, and you are able to pay your bill in full every month to reap those rewards. But if you're keeping a credit card balance, then you need to think about the possible consequences of putting everything you buy on there. Maintaining a credit card balance that grows over time means that you will ultimately find it harder and harder to pay down. Many consumers mistakenly assume that their card rewards will neutralize or make up for their spending. This, of course, isn't the case.
Impulse buying has become second nature.
Impulse buying gets us all once in a while. But the habit can sneak up on you more easily if you always have a credit card with a high credit limit in your back pocket. In order to curb impulse shopping, you need to regain some common sense and question everything you buy for a while. One way to control your spending urges is to set up a budget and account for all the spending you do. It's helped me to keep a closer eye on the purchases I make.
You don't stick to a budget.
I just mentioned the benefits of drawing up a budget. A budget allows you to become intimately aware of your limits so you don’t exceed them, and many responsible credit card users are able to keep their spending in check because of the simple act of budgeting. But it's not enough to set up a budget; you also have to make the commitment to stick to it! You can develop a budget with the use of simple spreadsheets or a free budgeting tool like Mint.com. If you are more inclined towards desktop applications, then YNAB is a good option.
The idea of cutting up your credit cards makes you break out in a cold sweat.
Does it make you nervous when you think about leaving the house without your cards? If it does, it’s time to think seriously about who is in control — you or your credit card. You should never feel as if you couldn’t do without one in your wallet. Many folks have switched to using cash for all their transactions and have actually found it to be a liberating experience.
If you can’t spot any of the above signs just yet, congratulations. You are still in full control of both your common sense and your credit cards. But don't get complacent yet; it's important for you to always track your credit card usage and how much you spend. So keep your eye on those cards!