If you have a history of overspending on credit cards, you’ve probably gotten pretty good at rationalizing your bad habit. But the truth is that charging too much to your card is no laughing matter; it’s costly (interest really adds up!) and could put your credit score in danger.
With that in mind, the Nerds are here to bust 3 lame excuses for overspending on credit cards. If you need some tough love, take a look at the details below!
1. “My friends pressured me to go to the mall”
Peer pressure doesn’t end in high school – adults can really lay it on thick. If your friends convince you to go shopping when you’re trying to stick to a budget, you could be putting yourself in temptation’s way.
The obvious way to get past this is to simply say “no” to an invitation to the mall. If you still want some social time, invite them over to your place for a cheap cocktail hour or a potluck dinner. There’s no rule that says trimming your credit card balance has to be boring!
If you really want to join in on a shopping trip, a good way to control your swiping is to leave the credit cards at home. Hit an ATM and take out an amount of cash you’re comfortable spending – when it’s gone, it’s gone. This way, your pals can’t talk you into buying an overpriced item that looks so good on you. You won’t be able to!
2. “I had a bad day/week/month and deserve a treat”
Spending as a way to relieve stress is something a lot of us can relate to. But the next time you’re trying to justify maxing out your card for a last-minute getaway or another takeout meal, consider whether you “deserve” the repercussions that will come with the purchase.
For example, let’s say you’re coming off of a stressful month at work, so you decide to max out your credit card to take a last-minute vacation. In an effort to unwind, you drop $5,000 that you can’t afford to pay off when the bill comes due. If we assume that your card’s APR is 15%, you’ll get hit with an interest charge of roughly $63 the following month. If you let that balance linger, you could end up tacking hundreds of dollars onto that $5,000 getaway.
What’s more, maxing out your credit card could cause your credit score to plummet. Since your credit utilization ratio will shoot up – remember, this factors heavily into 30% of your score – you should expect it to drop substantially. This will make it harder to rent your next apartment or qualify for a car loan.
These outcomes are definitely not worth it. You deserve to de-stress and build a healthy financial future; if you’re upset or anxious, put your credit card down and go for a long walk or call a friend. Pretty soon, you’ll forget all about that expensive treat!
3. “I’m getting a bonus soon – I’ll pay it off then”
We all get excited about the future, but spending too much because you’re anticipating a windfall is a dangerous game to play. First of all, there’s always the possibility that a bonus or a raise won’t come through. If you just spent $2,000 on a new flat screen TV in anticipation of a bonus, having it yanked at the last minute could put you in financial trouble.
And again, there’s the interest rate issue to consider. Even if your bonus does come in on schedule, buying something because you want it now will result in paying more if the charge stays on your card for a few months.
The best way to get past this excuse is to remind yourself that you’re a grown-up, and grown-ups are sensible. In this case, the sensible thing to do is be patient and wait for the extra cash to hit your account. That way, you can use your credit card to buy it and pay off the balance right away. Delaying gratification is tough, but it’s an essential part of making good financial choices.
Overspending on credit image via Shutterstock
Source Article http://ift.tt/1y39EC7
0 comments:
Post a Comment