Your Money

Impulse buying can damage your credit score

If you have ever fallen prey to impulse buying, you're not alone.

Over half of Americans have spent $100 or more on spontaneous purchases, with nearly 20 percent of consumers spending at least $1,000, according to a new study by

Liz O. Baylen | Los Angeles Times | Getty Images

Not surprisingly, the study found that the most common recipient of an impulse purchase is the buyer themselves. What's more, millennials are leading the charge.

While people may experience instant gratification after that big purchase, financial experts warn of the dangers of overspending and what that means to your credit score.

"Not only can overspending affect your credit score, but it could potentially hurt you in terms of qualifying to get a new apartment or buying a new car," said Sophia Bera, founder of Gen Y Planning. "But the biggest problem is that it will likely affect your relationships."

Bera, who specializes in financial planning for millennials, tells her clients to speak with their significant others or family about their purchases and employ a waiting period of about a week before making impulse buys.

How to make your child a future tycoon

"Anytime there is an item you want that is over $50, wait a week to buy it. Then it is no longer a true impulse buy if you still want it," she said.

Another tip she offers her clients is to avoid getting drawn in by the tantalizing aisles of a department store. She says to just avoid going to the store in the first place. This strategy may seem obvious, but the study found that nearly 8 in 10 Americans made most of their impulse purchases in a store.

"If you are a gadgets guy and know you are prone to spending, then don't walk down the Best Buy block," Bera said. "Avoidance is truly the best way to curb that type of expenditure."

Keeping the tags on items after you buy them also helps counteract impulse purchases. After trying on clothes at home, you could find they do not look as good as they did in the store.

A customer receives cash change from a cashier at a Wal-Mart Stores Inc. location in the Porter Ranch neighborhood of Los Angeles, Calif.
Waiting for that big raise? You're not alone

Though a large part of out-of-control spending has to do with a lack of financial literacy, financial experts agree that the ease at which people can get credit cards also contributes to overspending.

Another recent study found that more than 50 percent of respondents said they had received their first credit card by age 21, but 72 percent said they had received no education about personal finances before going to college.

"Unfortunately, some of these financial lessons have to be learned the hard way," said Matt Schulz,'s senior industry analyst. "A lot of it has to do with where you are in life. Millennials might not know what it is like to experience debt."

The current average interest rate on a credit card balance is 15.07 APR, with many introductory cards assessing much higher APRs. Without knowledge of how compounding interest works, the potential damage done to your credit score can outlast the positive emotions that may result from an impulse purchase.

"Paying interest on your monthly balance ends up being the cost of spontaneity," Schulz said. "Even if you have a pretty good understanding of interest, you don't necessarily feel the full impact until you have to pay it."