How to Manage Your Credit Card Spending

With sizable sign-up bonuses for free travel and advanced security protection on purchases, many credit cards come with perks. But you should be aware of the potential downsides—such as high interest rates if you carry a balance and high credit limits that can lead to overspending. 

You need to know how to manage your credit card spending. Whether you want to pay down a balance, figure out a strategy for managing multiple credit cards, or confirm you’re using your credit responsibly, you must understand your options. 

So here’s how to manage credit card spending: Pick a strategy, track your purchases, and move forward with a clean slate.

In this guide:

• How to manage credit card spending

How to manage credit card spending

Managing credit card spending depends on your goals. 

Most people have one of two objectives:

• Pay down their credit card balance 
• Maintain their debt-free lifestyle 

Regardless of which category you fall in, you can better manage your spending with these strategies. 

If you want to pay down credit card balances

If you have a credit card balance, you’re not alone. According to recent data from the Federal Reserve, 50% of credit card holders carried a balance at least once from 2020 to 2021.

Ready to pay down your credit card balance? Here’s how to make it happen. 

Make a plan to pay down debt

You’ll find many strategies for paying down debt. The following are popular strategies, but it isn’t an exhaustive list. 

No matter which you choose, pay the minimum due for each balance to avoid late fees and a lower credit score. 

• Debt snowball: This strategy aims to mimic the momentum of a snowball rolling down a hill—the ball gets larger and faster as it keeps going. To do that, you pay off the smallest debt first. So if you have two credit cards, one with a $200 balance and the other with $2,000, pay off the $200 first. Then use that momentum to tackle the $2,000 balance next. 
• Debt avalanche: To use this strategy, make extra payments toward your credit card debt in order of interest rates. Focus on the balance with the highest interest rate first, then the next highest rate until all your debt is gone. The avalanche guarantees you’ll pay less interest since you tackle the highest rates first. 
• Extra payments: If you’re not ready to commit to one of those plans, try making an additional monthly payment. Even if you make part of your minimum payment earlier in the month and the remainder on the due date, you can save on interest fees. 
• Debt management plan: You can work with a nonprofit credit counseling agency to repay your debt. This strategy might be an option if your credit card debt is overwhelming or you can’t meet the minimum payments. The counselors can work with lenders on your behalf to create a realistic payment plan that works with your budget.

How to track credit card spending

It’s easy to lose track of purchases, especially if you have more than one card.

Tracking your credit card spending serves two functions: It helps you understand how you spend and helps to avoid overspending.

• Keep it digital with apps. The two kinds of apps to track money are those that sync with your accounts to track purchases and those that mimic spreadsheets and require manual updates. The best fit for you depends on personal preference, but if you use your phone to manage tasks, tracking apps are an effective way to manage your spending. 
• Update by hand with spreadsheets. There’s something to be said for the old-fashioned method of tracking expenses with pen and paper or computer and keyboard. Spreadsheets require accountability because you must review every purchase as you add it. Plus, it provides an overview of your spending throughout the weeks, months, and years. 
• Get reminders with text alerts. Most banks can provide text alerts for purchases made with your card. These text alerts tell you where and when each item was purchased and its cost. Alerts can be a helpful first step, but you might still need to track expenses in a spreadsheet or app.

Consolidate your debt

If you have credit card debt spread across different accounts, you might want to consolidate your debt. This is when you combine loan balances or move the balances to a different lender.

One of the most popular types of debt consolidation is a balance transfer, where you transfer your credit card balance to a new credit card with a 0% introductory APR. The introductory rate is for a finite time, and you’ll often pay transfer fees, so be sure to read the fine print.

Debt consolidation isn’t for everyone because if you don’t stick to the plan or pay your balance before the introductory rate expires, you may pay even more interest.

This strategy often works best if you can’t pay your current balances in full and your card has high interest rates. If you have multiple credit card payments across different accounts, consolidation might also be helpful. But mainly, it works best if you can commit to the new repayment plan and timeline.

If your credit card debt is paid off

If you’ve paid off your credit card or never had a balance, it’s still a good idea to use your card responsibly while taking advantage of card perks. 

Here’s how to manage your credit card spending if you don’t have a balance. 

• Take advantage of rewards programs. Credit cards come with different perks, often including airline points, hotel vouchers, reimbursement for the Global Entry application fee, airline lounge access, or cash back on purchases. You don’t need to carry a balance to use the rewards, so continue to pay your balance in full while cashing in on the free perks. 
• Track your spending. It’s wise to track your spending to avoid fraudulent charges and stay on budget. But it’s even more critical if you have multiple credit cards. That’s where credit card tracker apps come in. These apps allow you to view and manage all your credit cards in one place, making it easier to monitor purchases and avoid missing payments. 
• Pay off your balance in full each month. Regardless of your history with credit card debt, you always want to pay your balance in full each month. Paying in full helps avoid late fees, interest charges, and negative impacts on your credit score. 
• Be proactive if you miss a payment. If you miss a payment, be sure to pay within 30 days since it might not be reported to the credit bureaus if you make it within that time frame. After that, contact your bank to ask whether it can waive the late fee. 
• Save an emergency fund: Emergency funds and credit cards go hand in hand—if you don’t have one, you must use the other. Unexpected expenses are a part of life. So if you don’t have a dedicated savings account, you might end up in debt because you used your credit card to pay the bill.