Cents and Sensibility The Shopaholic's 10 Credit Card Commandments Mary Dacuma

Hello. My name is Mary and I am a shopaholic.

Okay, former shopaholic. I had to make a serious effort to kick the habit when I realized that adulthood is expensive and I was going to die of kidney failure from all the ramen I was eating. Also, credit card debt is anxiety-inducing and no fun at all. Having two accountants for parents and a few years of experience in finance, I really should have known better.

It’s just so hard, you know? When you are a worldly girl who likes pretty things, interesting foods and fun social gatherings, it’s hard to say no to temptation. It’s even harder when you have a piece of plastic that allows you to have fun now and pay later. Without discipline and a keen eye on your budget, you might pay dearly for lacking of self-control.

Thus, I have listed the 10 Credit Card Commandments that my fellow shopaholics can follow in order to fight the good fight and keep their finances on the right path.

I) Thou shalt fully comprehend the power of having a credit card.

By having a credit card, you have the ability to build an amazing credit history that will allow you to own the things you want and need, like the right house or the perfect car. But you also have the ability to ruin your credit history and put all those possibilities out of reach. Take your financial responsibility seriously.

II) Thou shalt leave your credit cards at home sometimes

If you have more than one card, consider taking one with you in your wallet and leaving the rest at home. You won’t have the available credit to overspend. In the case of retail cards, you won’t even have the card handy to get the promotional discounts.

III) Thou shalt make a budget – and actually track it

If you don’t have the time to make a spreadsheet and log your expenditures, sign up for Mint.com. It’s one of my favorite websites. It securely tracks all your checking/savings accounts, credit cards, loans, real estate and investments. It even has a handy tool to create budget limits. Also, by categorizing expenses you can see where your money is going and if there are areas to make cuts.

Also, a budget is useless if you don’t follow it. Make it a point to look at your accounts a few times a week to ensure that you are staying on track. Seeing your spending in hard number form might make you more careful of your spending. As an added benefit, this makes it easier to track fraud or simple mistakes made by banks or merchants.

IV) Thou shalt take advantage of the magic of technology

Emotions can really screw up your financial discipline, like when you are too scared to look at your credit card statement or when you’re having too much fun to notice if you can afford your lifestyle. Lucky for you, computers have no feelings! And they will tell you the harsh truth if you ask for it. Here are a few things you can do:

  • Use Auto Pay whenever possible. It’s easy, inexpensive and environmentally friendly. It’s foolproof for forgetful procrastinators like me. And since it’s automatic, you are forced to pay a fixed amount and unable to talk yourself out of paying less. Bonus points if you set it to pay off the entire balance for the entire month. (You should probably do that anyway – interest charges are the worst!)
  • Set up direct deposit or automatic transfers into a savings account. That way you pay yourself first and reward yourself with what is left over.
  • Create a weekly alert that lets you know the balance on your accounts (this is great for preventing identity theft, too.)
  • If you’re using the budget tool on Mint.com, you’ll get email alerts anytime you overspend on a category. I get one every year on Thanksgiving for overspending on groceries – oops!

V) Thou shalt not charge both day-to-day and one-off expenses

One day when you are capable of consistently exercising self-control, you can charge everything, pay it off in full each month and reap the benefits of rewards points, discounts, frequent flyer miles or what have you. But until you build your willpower, putting everything on a credit card can lead to overspending. The benefit of paying cash is that you feel the cost right away. So you can do one of two things:

  • Charge your day to day expenses (utilities, groceries, necessities) and pay it off in full each month. Fund your social life with only the cash that is leftover. That way you pay immediately for things you don’t need rather than put off the payment for money you haven’t earned yet.
  • Pay your day-to-day expenses in cash so they are covered right away. Charge emergency expenses and unnecessary expenses, so long as you can pay it off each month in full.

Choose whichever option is more effective for you.

VI) Thou shalt not miss a credit card payment

Ever.

VII) Thou shalt not be promiscuous with your lines of credit

Any store that offers a credit card will try to convince you to apply for it. This might be tempting. Card members get small discounts all the time and you might like the idea of having more available credit to spend. Don’t do it! More credit cards = more temptation. And too many credit inquiries can ding your credit score.

The “right” number of credit cards will vary depending on your individual needs. Keep it to the fewest number of cards that will allow you to charge what you need without maximizing your debt to credit ratio. You don’t have to accept every credit card offer that comes calling. Don’t settle. Look for the right offer and that’s if you even need a card in the first place.

VIII) Thou shalt not covet thy neighbor’s closet

Don’t let other people’s possessions dictate your standard of living. People have different backgrounds, incomes, savings, investments, etc. Just because your best girlfriends are splurging on the latest designer dresses doesn’t mean you can. Let your budget and common sense dictate what you can afford. Your friends’ finances are their business.

IX) Thou shalt not cancel a credit card without giving it some serious consideration

Breaking up with a credit card can be more serious than breaking up a relationship. It unfavorably adjusts your debt to credit ratio which will affect your credit score. But maybe that card has a high annual fee that isn’t worth it. Or maybe the terms have changed since you first got it and the card no longer suits your needs. Or perhaps you really, REALLY can’t resist temptation. If that’s the case here are some guidelines:

  • Don’t cancel your oldest card unless you’ve got some ridiculous annual fee. Otherwise you will shorten your credit history until the beginning of your next credit line. This might be bad news bears for you.
  • Don’t ever, EVER cancel a card without paying it off in full. I recommend calling the lender to confirm your zero balance beforehand.
  • Don’t cancel a card right before you need to apply for a loan. This is not a good time to lower your credit score.
  • Don’t cancel a card if it’s the only card you have with available credit.

X) Thou shalt get help when it is necessary

We use a lot of figurative language connecting mental health and shopping – shopaholic, product junkie, retail therapy, shoe addict, etc. But Compulsive Buying Disorder is an actual thing that is no joking matter.

If you display symptoms of shopping addiction, including lying about your spending, feeling euphoria as a result of shopping or feeling lost without your credit cards, consider professional help.

There you have it! The 10 Credit Card Commandments for Shopaholics. Abide by them and you, too, can attain financial salvation. Okay, so maybe that’s a little dramatic. But still, if Moses were a personal finance guru, I can’t help but think he would approve.

Image by Shutterstock

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  1. Don’t look up your credit score on Mint.com, When I checked for mine, I had a fraudulent charge to my account for $39.00 by a company called Experian. I checked if this happened to other people and there were a lot of complaints. Just giving you a heads up.

  2. This is great advice, but unfortunately it’s very US-centric. While I lived in the US, this would be great to follow…I even used Mint.com! But…Mint.com is not availabile in the UK. I also do not have a credit card while in the UK (I’m living off student loans right now as a grad student).

  3. I’ve never even heard of Mint.com. Where have I been?! That sounds like something quite worthwhile. Although I’m good at managing all those things it would be super convenient to just have one login to track it all instead of 4.

  4. I love Mint! I check it on an almost daily basis just to make sure everything is correct. I’m actually quite OCD with these things. Which is partically because I am a total OCD buyer. Haha, oops. At least it’s balanced right?

  5. That mint.com looks really tempting!!! I tried to set myself up but got the heebie-jeebbies when I had to put in my bank accounts and passwords all in one place.

    Also, you kind of blew my mind with the IX commandment – I had no idea that cancelling a credit card could negatively affect your credit! How can cancelling a card before applying for a loan lower my credit score? Does all the history dissapear? I’m sure the opposite doesn’t apply (bad credit dissapears when you cancel credit card)… I’d love to know more about this commandment!

    • Mint.com is super secure! https://www.mint.com/how-it-works/security/

      When you cancel a card, it lowers your debt to available credit ratio. Let’s say I had $500 in credit card debt and two credit cards with $1,000 limit on each. As it stands I am using 25% of my available credit. But if I cancel a card then I only have $1,000 in available credit and am using 50% of it. I just doubled my ratio! And that drops your score. When you pay down that debt your score will improve. However, if you are about to apply for a loan you might not have enough time to bring your score up. I’d wait til you get the loan you need and then close the card.

      Also, cancelling a card doesn’t erase your history. That card is still in your report along with all of your on time and late payments. However, if you cancel that card it’s no longer active. After a period of time (usually around 10 years), credit bureaus can drop that history from your account. If you lived off one loan or credit card for a while before having any other credit activity, that drop off might really change things. So unless it’s got an annual fee or you really can’t help yourself from using it, it’s good to hold on to your oldest card and just use it once every few months, then pay off the balance right away.

      Mary Dacuma | 8/15/2012 10:08 am
      • I have canceled one credit card, which WAS my oldest card. But, I had to cancel it because it was one of those shady online credit cards. I started out with a limit of $250 and over the course of 4 years (less, I think, actually) it had risen to $5,300, without me even asking! The interest rate had risen to 29%. So, I’ve canceled the card but I’ve done it under a credit card consumer agency program and they dropped my interest rate to 15% and I’ve combined all my credit card debt into one monthly payment.