Recent analysis from Sainsbury’s Finance suggests that on average people spend £200 on line every month and up to 1.2 million spend more than £1000. Given that these are average figures in the run up to Christmas you can be sure that many internet shoppers will using their credit cards a lot more than usual. One of the major problems with using a card whether online or in the shops is that it is easy to generate credit card debt that you then cannot easily repay.
Unlike handing over cash where you can see notes actually disappearing from your pocket spending on a credit card does not give you the physical sense that the money you have is reducing. It is therefore easy to lose track of what you have spent. Shopping on the internet compounds this problem as there is no record of your transaction other than an e-mailed confirmation which you can easily overlook or simply not read at all.
Avoid Credit Card Debt by keeping a money diary
If you do not keep an eye on what you are spending it is very easy to go beyond your budget and generate credit card debt which you are then unable to pay when the bill arrives.
If you pay less than the total balance on your card or just the minimum repayment you will be left with expensive interest charges of up to 30%. If this situation continues you will eventually get to a point where you have built up debt that you are unable to repay.
You can reduce the risk of credit card debt by keeping a money diary. This is a simple record every time you use your card giving you a running total of what you owe. However this will only help if you are clear about the budget you can afford to spend.
Keep credit card debt to a minimum by knowing your budget
Before you start your on-line shopping one of the most important things you should do is decide the maximum amount that you can afford to spend. For example at Christmas if you have a number of people to buy presents for divide your budget between them to give you a good idea of how much you have to spend on each.
As you do your shopping, and record everything you spend in your money diary, deduct this expenditure from your budget balance. By following this process, you will always keep track of your spending and know when you are getting close to spending more than you can afford.
Setting a budget before you start your internet shopping combined with keeping a money diary of when and when you spend will help prevent you overspending and running up credit card debt which will give you a financial headache in the New Year.
