For the past three months, Hubs and I put a hard cap on our credit card spending. We agreed that together we’d spend no more than $2,000 in each cycle. And each month we made our goal!
A lot of Niconail readers use debit cards – when I asked on our , 9 out of 10 readers who responded said they had NOT A SINGLE credit card in their wallet.
Have you ever set a cap on your debit or credit card spending?
The problems with a hard cap on spending
- It is a vague way of spending less; specific categories are not targeted
- It leaves little room for big, irregular purchases, like the $856 we spend on wood to rebuild our backyard fence
- Check writing is ignored (the majority of our spending, aside from our mortgage, goes on the card, but some expenses, like babysitters, only show up in the checkbook)
- You are still at risk for credit card surcharges and fees if you pay late
The advantages of a hard cap
- It is a simple way to spend less on your credit card
- It forces you to monitor your credit card balance more closely
- You have to prioritize spending when you get close to your limit
- You can make the rules! For instance, we decided to exclude any major purchases, like a new fridge, from the hard cap
- You still earn credit card rewards
What we cut
- Eating out less
- Seasonal clothes
- Home decor
What we spent most of the money on
- Eating out (it’s one of my favorite ways of indulging!)
- Two mini-vacations on the weekend, first to Boston and then to hike in New Hampshire
- Downton Abby Season Three ($15 on Amazon)
What we excluded from the spending limit
- Check writing (mostly for babysitters and the rare massage)
- Major purchases, like a new car or appliance
How we put the plan into action
- I set a reminder two weeks into our credit card cycle and again three weeks into the cycle to check progress
- I updated Hubs on how much we had put on the card at two and three weeks
- If we were close to our $2,000 spending limit in the final week, we both agreed to only buy gas or groceries
- If we went over $2,000 one month, we would subtract the overage from the next month. So if we spent $2,200 in January, the hard cap would lower to $1,800 the following month
Have you ever tried capping your credit card spending?
What penalties or consequences do you set? How do you motivate yourself to stay within your limit?
Submit your credit card statement (anonymously) and get free help from the Niconail to cut your spending!