In case there was any doubt about the prevalence of credit card usage in Canada, consider these statistics:

Clearly credit cards offer a convenient way of paying for expenses and can be an extremely useful tool when used responsibly. In many cases they also offer additional benefits such as cash back or various types of reward points.

Using a credit card responsibly can also improve your credit score since credit bureaus like to see a mix of different types of credit on your account, including credit cards.

The problem is sometimes they can become “too convenient” to use and lead to overspending, as we can see from the numbers mentioned above. In fact, the reason credit card issuers offer cashback and other incentives, is precisely to encourage us to spend more using our credit cards.

Staying on top of your credit card usage can be tricky but it is critical if you want to be able to manage your finances well. Below are a few tips that you may find helpful in getting a handle on your credit card usage. 

1. Leave Your Credit Card at Home

Not carrying your credit card with you everywhere means you will be less tempted to use it. Although this can lead to some inconvenience, on the plus side it means you are less likely to use it for impulse purchases and more likely to think twice before you buy things you don’t really need. Obviously if you decide to do this, you’ll need to make sure your credit card is kept in a safe location.

2. Reduce Your Credit Limit

One way of limiting your spending is lowering the spending limit on your credit card which will force you to pay closer attention to what you are charging to your card.

However, you need to keep in mind that this can potentially have an affect on your credit score. This is because of what is known as credit utilization. If you end up going above 30% credit utilization, your credit score can be affected.

3. Carrying Cash

By carrying cash to cover your weekly purchases, you will be able to rely less and less on your credit card. Using cash often feels more real than using a credit card and gives us a more tangible feeling of spending money. For this reason, you may be more likely to think twice about certain expenses. When you have used up the cash allocated for your weekly expenses you are more likely to limit further spending.

4. Avoiding Spending Triggers

Sometimes it’s hard to walk into a store without buying a treat for yourself. If that sounds like you, then work on reducing the number of times you go to stores. This will help you avoid those spending triggers and the temptation to spend. Similarly, start thinking of advertisements as another spending trigger. Consider unsubscribing from all those promotional e-mails that offer you discounts. Often, they just entice you to buy products you don’t really need in the first place.

5. Being Prepared for Emergencies

If you don’t feel you have enough funds to deal with an emergency expense, you’re not alone. According to an Ipsos poll, nearly half of Canadians are $200 or less away from financial insolvency. This is an alarming statistic and should serve as a wake-up call. What tends to happen is that some people rely on credit cards to deal with unexpected or emergency expenses instead of relying on an emergency fund.

You should start saving for an emergency fund right away if you don’t already have one. Even if you can set aside a small amount each month, it all adds up and after a few months you would have saved enough to be able to deal with an emergency expense without relying on your credit card and getting deeper in debt.

Bringing Your Credit Card Debt Under Control

Reducing your credit card usage is an important first step in getting rid of your credit card debt. Noticing and understanding your spending triggers will help you reduce spending and stop you from adding to your debt load. 

Once you see some progress in that area, consider putting the money you’re no longer spending toward paying down your credit card debt. By making additional payments you will be able pay off your debt much faster since you will be saving a lot of money on interest. As you probably know already, the interest on credit card debt can be significant and that’s one of the factors making it hard to pay off credit card debt.

Create a debt repayment plan focusing on paying off as much as you can on the debts that carry the most interest (like credit cards). Be realistic in terms of how much additional payments you can make each month to reduce your debt load, but make sure you stick to your plan. Seeing what you have accomplished after a few months would boost your confidence and motivate you to continue your path.

One option you may want to consider is to consolidate your debt with a personal loan. One of the advantages of debt consolidation is that you may find it easier to deal with only one loan as opposed to multiple loans. Of course, this will also depend on the interest rate you qualify for and how that compares to your existing credit card debt.

Finjoy offers personal loans without origination fees or prepayment penalties. To find out if a Finjoy personal loan is the right solution for you feel free to give us a call and speak to one of our friendly advisors.

Commit to start acting today by following the tips listed above. The sooner you start, the sooner you will see the results and the closer you will get to brining your credit card debt under control.