StashLearn
Financial education, no lectures.

Follow and listen to our podcast

Get the app
Teach MeMoney NewsMoney TalkStash
Money Talk

5 Ways to Cut Down on Credit Card Spending

March 05, 2018

  • Consider reducing the number of credit cards you use
  • TIP: Disconnect cards from online shopping sites
4 min read

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.

Investing, simplified

Start today with as little as $5

Get the App

By Nathalie Lagerfeld

Next for you
Your Financial Life Checklist

Investment Profile

Gamers FTW!: Invest in a Video Games ETF on Stash

Invest in the multi-billion dollar video game industry.

Learn more
Explore more articlesChoose a topic to learn more about
money lessons Technology politics market news pop culture
Disclaimers

This material has been distributed for informational and educational purposes only, represents an assessment of the market environment as of the date of publication, is subject to change without notice, and is not intended as investment, legal, accounting, or tax advice or opinion. Stash assumes no obligation to provide notifications of changes in any factors that could affect the information provided. This information should not be relied upon by the reader as research or investment advice regarding any issuer or security in particular. The strategies discussed are strictly for illustrative and educational purposes and should not be construed as a recommendation to purchase or sell, or an offer to sell or a solicitation of an offer to buy any security. There is no guarantee that any strategies discussed will be effective.

Furthermore, the information presented does not take into consideration commissions, tax implications, or other transactional costs, which may significantly affect the economic consequences of a given strategy or investment decision. This information is not intended as a recommendation to invest in any particular asset class or strategy or as a promise of future performance. There is no guarantee that any investment strategy will work under all market conditions or is suitable for all investors. Each investor should evaluate their ability to invest long term, especially during periods of downturn in the market. Investors should not substitute these materials for professional services, and should seek advice from an independent advisor before acting on any information presented. Before investing, please carefully consider your willingness to take on risk and your financial ability to afford investment losses when deciding how much individual security exposure to have in your investment portfolio.

Past performance does not guarantee future results. There is a potential for loss as well as gain in investing. Stash does not represent in any manner that the circumstances described herein will result in any particular outcome. While the data and analysis Stash uses from third party sources is believed to be reliable, Stash does not guarantee the accuracy of such information. Nothing in this article should be considered as a solicitation or offer, or recommendation, to buy or sell any particular security or investment product or to engage in any investment strategy. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission. Stash does not provide personalized financial planning to investors, such as estate, tax, or retirement planning. Investment advisory services are only provided to investors who become Stash Clients pursuant to a written Advisory Agreement. For more information please visit www.stashinvest.com/disclosures.