5 Tips to Stop Overspending on Your Credit Cards

Overspending on your cards could be a financial disaster.

Using credit cards can be a positive thing if you do it the right way. Your cards can help you earn a good credit score if you show you can use them responsibly. But, if you overspend on your credit cards, it can be a financial disaster.

Cards have high interest rates, which makes them a very expensive way to borrow if you don't pay off your balance in full. And the minimum payment on them is low, so it's easy to become trapped in debt for years if you don't pay more than the amount required.

The good news is, there are ways to stop overspending on your cards so you can benefit from the credit-building features they offer, and so you can earn the rewards many cards offer. In fact, by following these five tips, you can hopefully keep your spending limited on your cards to the amount you're able to pay off in full each month.

1. Set a budget

If you live on a budget, you will know exactly how much you can afford to spend on each different type of purchase from groceries to entertainment. You can make sure that you don't budget more than you're able to afford to pay for each month.

If you do this, and stick within your spending limits, you can use your cards for as many purchases as possible to maximize your rewards and you'll still know that you have the funds to pay your balance down to $0 and avoid owing interest.

2. Track your spending

It's important to actually keep track of what you are spending. This has a few benefits. First, by tracking where your money goes, you can make sure you stick to your budget and that you don't accidentally charge too much. Second, you'll be more likely to think carefully about a purchase if you have to write it down while tracking spending so you will be less likely to just reach for the cards mindlessly and buy things you don't need.

3. Sign up for account alerts

You can typically sign up for alerts from your credit card company, including those that will tell you if you spend too close to your credit limit. If you pay attention to these alerts when they come in, they can help you realize when it is absolutely time to stop spending.

Typically, you'll want to make sure you actually keep the amount you charge below 30% of your available credit line in order to avoid hurting your credit score. While your credit card company may not offer the option to set an alert when your spending exceeds this amount, you can use third-party apps that allow you to set a budget and get notified when you exceed it.

4. Shop with a list

If you're going shopping for anything with your credit cards, first make a list of exactly what you need to buy -- and stick to it. This helps reduce the likelihood you'll end up charging something you can't really afford.

5. Institute a 24-hour rule

Finally, you'll want to cut out impulse spending on your credit cards -- and setting a 24-hour rule can help. With this rule, if you see something you want, you commit to wait 24 hours to buy it. During this waiting period, you'll have time to think about whether the item is really worth paying for and if you can really afford it.

By following these five tips, you can make sure you aren't overspending on your cards so you can avoid high interest charges that make credit cards a problem.