How to Avoid Overspending on a Credit Card

Quick Answer

You can avoid overspending on your credit card if you set a budget and stick to it, focusing on spending only what you can pay off every billing cycle. Also consider limiting how many cards you have and your overall available credit.

A woman is leaning on her hand while looking at her credit card with documents and an open laptop on the table.

At Experian, one of our priorities is consumer credit and finance education. This post may contain links and references to one or more of our partners, but we provide an objective view to help you make the best decisions. For more information, see our Editorial Policy.

Overspending on a credit card can put a strain on your budget and potentially damage your credit score. You can avoid overspending by tracking your spending, only making purchases that you can pay off and resisting the urge to overspend for rewards. If you're already dealing with the consequences of overspending, it's important to limit or even stop new purchases while you tackle your credit card debt.

Here are four ways to curb overspending on your credit card.

1. Only Spend What You Can Afford to Pay Off Today

A good way to avoid overspending is to essentially treat your credit card purchases the same way you would treat purchases made with a debit card or cash: Make a purchase only if you have enough cash in your bank account today to pay it off.

You don't necessarily need to pay it off as soon as the transaction posts, but make sure you have enough in your checking account to cover your credit card bill and any other bills and obligations you may have during the month. If you're able to make more than one credit card payment a month, that has the double benefit of keeping your spending on track and potentially helping your credit score.

2. Create a Budget to Guide Your Spending

A budget can get you to think more about how and where you spend your money so you can understand what changes you might make to better reach your financial goals.

You can start creating your budget by calculating your income and expenses over the past few months. Then, categorize each transaction so you have an idea of how you spend your money, and set goals for the month based on how you'd like to manage your money for that time period. Make adjustments each month until you perfect the process.

There are several different types of budgets you can try. Which one works best for you will depend on which one you're most likely to stick with. It can help to sign up for a budgeting app that imports the transactions from all of your accounts into one place.

It can take several months to get the hang of it, but following a budget can make it a lot easier to work toward your financial goals—and it can help you avoid spending money on things you don't need.

3. Don't Get Carried Away With Rewards or Discounts

Credit cards offer rewards such as cash back, points or travel miles to encourage you to use your card. While these benefits are appealing and can provide value, overspending typically results in interest charges, which may completely neutralize any value you get for the rewards. As such, try to use your card to only buy things that you would've bought with or without the card's benefits.

It's especially important to avoid overspending when you're trying to earn a credit card sign-up bonus, since you may have to spend thousands of dollars to be eligible for the bonus. If you don't already spend enough with your normal expenses to meet the minimum spending requirement for a bonus, don't apply for the card.

4. Limit Your Spending Power

Having multiple credit cards can be beneficial for a variety of reasons, but if having that much available credit proves to be tempting, it may be best to stick to just one card. You may also consider asking for a lower credit limit so you wouldn't be able to overspend if you tried.

Keep in mind that having just one or two credit cards with low credit limits could cause problems with your credit score. Your credit utilization rate, or the percentage of your available credit that you're using at a given time, is an important factor in your FICO® Score , and it's a lot easier to end up with a high utilization rate if you don't have much available credit. The lower your utilization is, the better, so keep that in mind as you consider limiting your spending power.

What to Do if You Overspend on Your Credit Card

While it's important to take steps to avoid overspending, mistakes can happen. If you've taken on more credit card debt than you can handle, the first step is to limit or even stop making new purchases with these cards. That way, you're not adding more debt as you try to pay it off. If you can, stick to cash or a debit card for the time being.

Second, create a debt payoff plan. This can include payoff strategies like the debt avalanche or debt snowball method, or if you owe money on multiple credit cards, there are various debt consolidation options. As you work to pay down your credit card debt, you can start implementing some of the steps above to avoid adding more in the future.

Understand How Your Spending Affects Your Credit

Whether you're trying to avoid overspending on your credit cards or working to pay down some debt, it's important to understand the correlation between your spending habits and your credit score. In particular, racking up a high credit card balance relative to your credit limit can hurt your score and impact your ability to obtain affordable credit in the future.

With Experian's free credit monitoring service, you'll not only get access to your FICO® Score and Experian credit report, but you'll also get real-time alerts when changes are made to your report. This can make it easier to understand how your actions impact your credit, as well as the steps you can take to address potential issues as they arise.