The Monthly Credit Card Bill

Katy Song, CFP®
Mar 21
 min read · 
Financial planning
The Monthly Credit Card Bill

The Monthly Credit Card Bill

For the last few years, I have noticed the creep of my client’s and my own credit card bill balances. Ten years ago, a bill over $8,000 was an outlier. It meant you bought a hot water heater or paid for a week in Hawaii. Nowadays, a bill under $8,000 is a good month.

Two key factors explain this creep: Online shopping and Credit Card Rewards.

Online shopping has replaced in-person shopping as a primary method of buying almost everything. Online retail shopping accounted for only 5% of total sales in 2010. By 2020, it was 18% of retail sales. In 2020 and due to Covid, online shopping increased 44%. Amazon dominates and makes up 50% of US online retail sales for 2021. Online shopping is as easy as one-click from your phone. Remember, back in 2010, there was no iPad.

Around 32% of consumers use credit cards for online shopping partly due to fraud protections. Federal law limits the liability of a cardholder to $50 if there is fraud. Also, there has been a proliferation of rewards offered by credit cards to get you to use their cards as much as possible. Amazon and Apple have developed a loyal following with 5% cash back rewards. Travel credits are also a big draw for anyone looking to spend less on airfare these days. The rationale tends to be that if you are going to spend the money anyway, you mind as well get something beneficial from it, like a free plane ticket or gift card.

It is time to re-adjust what to expect each month when you receive your credit card bill. It doesn’t serve you to compare it to what it used to be. How you pay for things and where you shop have changed. This is not an excuse to be completely carefree with online shopping. The ease of online shopping at Amazon is a problem. Spending more than $700 per month at Amazon is a red flag. If you have no red flags, look at your credit card spending and see what your average month has been. Re-set expectations going forward. You will spend less time beating yourself up every month.

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