Overspending can be a huge issue when you’re working out how to budget, especially if you’re not aware you’re doing it. If you think you might be spending too much, there are some signs you can look for to confirm.
We asked four financial planners what they consider to be the biggest red flag that someone needs to cut down on their spending, and they all said the same thing: credit card debt.
If you find yourself not paying off your credit card every month, there’s a good chance you need to find ways to cut down on spending. Here’s what these four CFP® professionals had to say about credit card debt and what to do about it.
How to know that you’re in credit card debt
You start accruing credit card debt whenever you don’t pay off your balance each month, which means your credit card will start charging interest on your balance based on the card’s annual percentage rate.
“Once they’re not able to pay off their credit card balance in full, then they really need to cut their spending,” says Alvin Carlos, CFP® professional and managing partner at District Capital Management.
When credit card debt becomes a major problem
While all of the financial professionals we talked to agreed that credit card debt was a major red flag, some disagreed on how much debt you can accrue before it’s time to make a change.
Valerie Rivera, CFP® professional, founder of FirstGen Wealth, says, “If you don’t pay off your credit card in full every month, then that’s a red flag that you are literally spending more than what you make.”
Meanwhile, Christopher Stroup, CFP® professional, founder and financial advisor for Silicon Beach Financial, says, “Usually I give it three months of consecutive minimum payments, or three months of carrying a balance, before I reach out to a client to have a conversation around that.”
He says that this approach accounts for emergency situations where you might temporarily go into credit card debt, either because you don’t have an emergency fund or your emergency fund isn’t sufficient, but you’re able to pay it off once the emergency is over.
Angela Moore, CFP® professional and financial guide at Fruitful, similarly said, “When I see that someone has grown credit card debt consistently over a period of time, that tells me that they’re spending more than they make.”
No matter what, if you’re in a position where you regularly can’t pay off your credit card debt each month, it’s time to make a change to your finances.
Ways to deal with credit card debt
Credit card debt is one of the most expensive types of debt you can accrue. The average credit card interest rate is 21.37% as of February 2025, according to the Federal Reserve. Because of this, credit card debt can build up quick, quickly snowballing into something uncontrollable.
If you find yourself mired in credit card debt, try to pay it off as quickly as possible. The first thing you can do is try to adjust your budget to make up for the additional costs.
Carlos says that, if your credit card balance is small, cutting something like streaming subscriptions might be enough to get yourself back on track. If it’s larger, he says you might need to consider more drastic measures to reset your spending, such as moving to a smaller place or getting a roommate.
If budgeting by hand seems overwhelming, budgeting apps can help you categorize your expenses and get an idea of where your money is going. Some budgeting apps like Rocket Money will even provide concierge services, such as cancelling subscriptions you have two of, but those services typically come with fees themselves.
Sticking to your budget once you’ve made it
Once you’ve got an idea of what your budget is and how you can cut down expenses, it’s important to make a plan and stick to it so you don’t end up in the same situation down the line. “There needs to be more of a system in place around spending and really understanding, this is what I want to spend and this is how I’m going to stick to that,” says Moore.
To keep from losing track of your credit card balance, Rivera recommends manually paying off your credit card frequently, even as often as once a week, instead of relying on autopayments. “It gives you a live view, and then I see my checking account balance go down, and then that’s when I’m like, ‘Oh, I’m going too far right now,'” says Rivera.
Keeping an active eye on how much you’re spending and sticking to your budgeting plan, whether using personal finance software or another method, will let you make progress on your credit card debt and help you avoid overspending again in the future.
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