3 Signs You Need to Rein in Your Credit Card Use

Financial tips

3 Signs You Need to Rein in Your Credit Card Use

Posted by Infinite Wealth Advisors, LLC
2 years ago | June 6, 2022

In times of high inflation and rising interest rates, one thing you’ll want to avoid is credit card debt. Carrying high balances on your cards will erode your spending budget over time, but this can impact your retirement satisfaction, too.

No one is saying to refrain from credit card use altogether, but you should definitely take note of these signs that your spending has gotten out of control.

Your card balances keep growing. Sometimes credit cards just can’t be avoided, such as when an emergency expense occurs. But your balances should be getting smaller over time, not larger. When you see those numbers going up each month, it means you’re spending more than you’re earning. And that’s not a pattern that you should continue.

Your credit score is suffering. Responsible use of credit cards can help you build a solid credit score in time, which can help you to qualify for a mortgage or even obtain lower rates on your auto insurance. But as those balances climb, so does your risk profile (at least according to the credit bureaus). If your score has been dropping lately, your overuse of cards might be to blame.

You find yourself making impulse purchases frequently. Do you often make quick purchase decisions and then experience shopper’s remorse? That is often because swiping a card does not feel as “real” as paying with cash. That is especially the case with online purchases from retailers that conveniently store your card information for you! And if you notice small daily purchases on your card statements, that’s another sign of impulse spending.

If you notice any of these above warning signs, it’s time to get your credit card use under control. Try a cash-only budget for daily purchases, and leave your cards at home. Stop storing credit card information with online retailers, so that you are forced to type in the numbers manually (often this is enough to make you think twice). And adopt a dedicated plan to pay down those balances, so that you will save money on interest over time.

For more strategies that will support your long-term financial plan, let’s discuss your spending at our next appointment. Our goal is always to help you reach your retirement savings goals.

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