Overspending on credit cards could lead to serious consequences, financial advisors share tips

Local News

RIO GRANDE VALLEY, Texas (ValleyCentral)- For some, shopping during the holidays on credit cards is all about getting cashback rewards on miles in return, but for others, it was to still buy gifts without spending their own money right away.

We asked over social media if anyone had put Christmas purchases on a credit card, but is having a hard time paying it back. One person who does not wish to be identified told ValleyCentral that finances have been tight this year, but he still wanted to give back to loved ones.

Joe Califia, a wealth consultant for Independent Wealth Consultants in Edinburg said can understand why people are relying on credit cards more than usual, but that “overspending can be a big problem.”

Califia added that maxing out your credit card limits or going above the normal percentage of spending credit card companies set could hurt your credit score.

“These credit card agencies wanna see you using a reasonable amount of your credit limit. However, once you start overspending, that’s a red flag to them,” said Califa.

It could also result in a cash flow problem every month and a decent retirement fund.

Rolando J. Perez Jr., President and Founder of Amicus Wealth Management in McAllen, said to regain control of your hard-earned dollars, you have to create a budget. A budget creates “awareness in where you’re spending.”

Perez Jr. suggests tackling cards with higher interest rates first as they could be the biggest hurdles to jump over if not paid off quickly.

It’s also recommended that you make small sacrifices. For example, if you’re spending $8 a day on lunch for five days a week, that’s $40 a week and a little over $2,000 a year.

Califa commented if you find yourself struggling through holiday credit card debt right now, it’s not too early to save yourself from doing so again this Christmas. He said instead of waiting towards the end of the year to make holiday purchases to start buying gifts throughout the year.

If you’re still not sure where to start with paying off credit card debt, there are financial counselors throughout the Valley, including Borderline Financial, 956 Credit Repairs & Taxes, and Edward Jones- Financial Advisor: Alex Ambriz.

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