First Step To Reducing Credit Card Debt Is To Stop Using Your Card

It sounds obvious but judging how many people (ab)use their credit cards they seem to forget it: to get out of debt you need to stop getting into more debt. That means putting your credit card on lockdown.

That’s one of ten tips offered by LowCards.com for reducing your credit card debt in 2011:

8. If you have a credit card balance, stop using it for anything other than necessities. If you use cash, you will not only save money on interest, but also reduce the amount you spend. According to a Dun & Bradstreet report, shoppers spend 12% to 18% less when using cash. Credit cards are convenient, but if you carry a balance, you are still paying interest for dinners, clothes, entertainment and things that are long gone.

For some people these means taking it out of the wallet and putting it in a drawer. Others may have to cut up their card entirely or freeze it in ice. Whatever it takes, before you can heal first you have to stop the bleeding.

Ten Tips to Reducing Debt in 2011 [LowCards]

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  1. Mighty914 says:

    zOMG!

  2. ARVash says:

    Use a debit card instead?

    • alstein says:

      Bad idea- as you’ll rack up overcharge fees instead.

      • A.Mercer says:

        Remember all of the Opt-Out articles earlier this year? You can opt out of the bank letting your charges go thru on a debit card if you do not have enough money in there. It is opting out of their overdraft protection plan. If you do this and you use the card and you do not have enough money in there then the transaction will not go thru. The card will be declined. You will not be charged for it if you opt out of the overdraft protection on the debit card.

    • Charmander says:

      Using a debit card is a great idea. It’s just like using cash, without carrying the cash around. You just need to be aware of how much you have in your checking account at all times.

    • TasteyCat says:

      Using a debit card is like carrying your entire bank balance in your wallet, and your protections if something goes wrong are limited.

  3. Hi_Hello says:

    necessities… the problem is some people think A LOT of think are necessities…

    believe it or not, some people don’t have cash. after paying off all their other bills, they are living off credit card, remove that and they can’t afford to eat. It’s whack.

    • reishka says:

      That’s the situation we’re in. It’s mostly because we’re two people trying to live off of one unemployment check (I’m collecting on unemployment – the hubby graduated school in 09, and hasn’t been able to get a teaching position. He substitutes, but he only ends up working maybe 5 days a month).

      We’ve racked up about 3.5k in CC debt the past year because after rent, bills, petrol, and food are bought for the month, we’re ~300 in the hole. We can’t move to a cheaper place ’cause we’re pretty much living next to the projects as it is — go any cheaper and we’ll be IN the projects.

      We have basic cable (20/mo), basic internet (40/month) — if we want to get rid of cable and keep only the internet, Comcast wants to jack our internet rate up by 20$. Unless we eliminate that all together, then it’s not worth making a change — but we can’t eliminate it all together because it’s how I mainly search for and apply to jobs (and same goes for the husband). I’ve also started going back to school (free money ‘cuz we’re so poor, so I don’t pay anything out of pocket) and a lot of my courses require internet access for some portion of it.

      We’ve scaled back on food. 50$ – 60$ a week for two people. Hardly any food goes to waste – I buy in bulk & freeze, or I use rotating dinner lists where the dinner of one night is made up from ingredients from other nights, etc.

      Petrol is petrol. No getting around what it costs. It’s usally about 50$ a week.

      Our apartment is entirely electric-based (no oil/natural gas). We keep the temperature around 45*F in winter and wear sweatshirts, hoodies, blankets. In summer We toss bags of rice in the freezer and use those to keep cool.

      And forget any ‘major purchases’. No books, no movies, no videogames, no nice things for the house. We’ve bought ONE videogame in the past year, and that’s it. No new clothes. We did buy a pair of shoes, but it was out of necessity (hubby had a hole the size of a golf ball in the sole of one of his shoes — those weren’t going to last the winter).

      Ugh. It’d be GREAT to get out of debt. But just ‘stop using the cards’ won’t work for us. =

      • Hi_Hello says:

        sorry to hear that.

        1) Comcast, give them a call, check online first. They had a deal where you can get internet for 20 bucks ifyou get basic cable for 10 bucks. it was 30 bucks plus tax and somthing it came to 40 something bucks. They might offer a new LOWER speed than what they had when you signed up.

        2) Husband need to find another job. In a field not related to teacher, just so that one of you have a job. If he can’t find one, what does he do with his day? I see a lot of delivery driver wanted…. if he can find a delivery job where he can bike instead of drive that should help with the income without causing any money. Plus with food delivery jobs, you get to bring some food back home.

        3) you might have to change what you eat for awhile. Back in the day when I was a broke college kid who was tire of ramen… I ate rice with soy sauce. Sometimes ketchup. Some time I threw an egg it in. Now if I need to go cheap, rice and lentils. Rice, Beans, and can food tend to be super cheap and have a high self life. Pasta also. haven’t stuff where you don’t need a fridge to store the food will help with the electric bill. And find free food events. That what I did in college. It cost me some spam but I have a hotmail account for that.

        4) gas..what do you drive? How do you drive? You might just need to change your driving habits to get more mileage from the gas.

        5) I found out that when I”m sleeping with NO HEAT at all, a bivvy is the best way to stay warm. Although when you unzip the bivvy, it’s freezing cold and I just want to stay in bed. I got a cheap bivvy for 20-40 bucks.. I forgot… As for the summer. When I was at my first apartment, even though utilities were included, I didn’t want spend money on an AC. I took lots of showers, but after awhile you get use to the temperature as long as you drink PLENTY of water.

        6) library for books and videos. Also you have the internet… get free movies.

        • photoguy622 says:

          Dave Ramsey, is that you?!

          I’m just joshing you, but I applaud your commitment.

        • Kibit says:

          Eating lower quality food isn’t always the best idea. Eating better food is better for your health. Even just catching a cold can get expensive. Tissue, cough syrup, tylenol, cold medicine, time lost for job hunting is expensive. I find when I eat better quality food then I don’t get as many if any colds during these months.

          • Beeker26 says:

            Less expensive doesn’t necessarily mean lower quality. For example, meat is a very expensive source of protein compared to legumes. And while fresh vegetables are better than frozen, the difference in nutrient content is minimal while the cost difference is often quite large. Having an egg for breakfast is much less expensive than a bowl of cereal + milk and has a lot less sugar.

            • Hi_Hello says:

              The day I found out abouy frozen corn, carrot, and pea mix was the day fried rice became super easy to make.

          • Hi_Hello says:

            Rice and beans, complete protein without any fat from
            meat. Vegetables and fruit and super cheap. I normally buy whatever fruit that is on sale. Also I found out the korean supermarket has better fruits and vegetables than american supermaket. Plus I get to try need fruit that i never though i would eat.

            I rarely get sick. If i do get sick, it’s something
            small and getting more sleep would let me recover in a day. I rarely take medicine when I do get sick.

        • reishka says:

          We’ve been looking into DSL instead of dealing with Comcast. The last time I called Comcast they said that I have the lowest prices they can give me and refused to budge. I dunno if I just got a bum rep or what. =

          Hubbs HAS been looking for jobs in other fields – retail, seasonal, whatever. Unfortunately, there’s nothing here. Unemployment rate is somewhere around the 14% rate for our town and those surrounding us. If he was to take a job it’d be in Hartford or New Haven — and it’s not worth a 45 minute car commute for a part-time job.

          Sorry, food is not one thing we’re going to budge on. We’ve knocked down the amount we spend, but I’m not going to be eating pasta or ramen 7 days a week – that’s not healthy at all. Nor is eating a lot of rice or beans. I especially need to keep an eye on what I eat because diabetes runs in my family and I am overweight — and trying to change that. But I can’t just eat pasta every night. We stick to mostly fresh foods and lean meats as much as possible. It may not be as cheap as I’d like (especially the fresh foods), but I’m willing to pay more for the food and come out better for it, even if it makes things tighter financially.

          We have a 1991 Honda Accord, and drive entirely in econo mode (vs. sport mode). We get ~300 miles to a tank (14 or 15 gallons). Petrol around here is ~3.20/gal.

          We can’t turn the heat completely off. We live in New England, and if we turned the heat completely off we’d freeze the pipes, and then they’d burst. We get by well enough with sweaters/hoodies/slippers. :) We also have about 3 quilts on the bed.

      • psm321 says:

        Wow my coworkers think I’m taking it to the extreme keeping it at 62-63 degrees in the winter…

      • Beeker26 says:

        $50 a week for gas seems like a lot for 2 people that don’t have to go to work every day.

        One thing you could look into: if you’re friendly with any of your neighbors that has wifi you could see if they’re willing to allow you to piggyback. Offer them like $10-$15 a month and then dump your own cable account.

        The other option would be to look into DSL. They won’t charge you extra for not having TV like the cable company does, and they often have a bare bones service for much less money than the regular packages (tho you often have to ask for it on the phone as they’re not advertised on the website). It’ll be really really slow Internet, but it’ll be a lot less than what you’re paying now.

        One last tip: turn the temperature of your hot water heater way down and only use hot water for VERY QUICK showers (use cold water for dishes and laundry). This can easily save $30-$40 a month.

        • catastrophegirl chooses not to fly says:

          i know a lot of people who passing over a $10 to the neighbors for piggybacking on wi-fi right now. seems to make the neighbors happy too since they are tightening their belts as well

        • reishka says:

          We know the neighbours in our building, but not in any of the buildings around us. Unfortunately, they’re all little old ladies that have no internet access. There’s one wifi network in the area besides ours, and I have no idea who it belongs to. I have been looking into the DSL idea, however.

          Also since we rent, we don’t have access to the hot water heater.

          The fuel is so high because I do commute to and from school 5 days a week in the next town over. Hubby does work occasionally as a substitute teacher in various parts of town. We also have a 1991 Honda accord that doesn’t do too terribly great — ~300 miles to 1 tank, which is 14 or 15 gallons, and petrol is about $3.20/gal. :(

  4. Clearly says:

    “8. If you have a credit card balance, stop using it for anything other than necessities”

    Some might say, if you have a credit card balance, stop using it for anything.
    For necessities, use cash or debit card.

    • pecan 3.14159265 says:

      Agreed. Why keep adding to your balance? Freeze the card, keep paying it off, but don’t add to the problem!

    • ARP says:

      I understand what you’re getting at, but if the person is living hand to mouth, don’t have a stable paycheck, etc. then they may need to keep using to keep food on the table, etc. Obviously, this assumes they’ve cut out all discretionary spending.

  5. Gravitational Eddy says:

    I concur. Cash users -always- get the better deal.
    It’s not that we’re cheap, just unwilling to be extravagant.

  6. pecan 3.14159265 says:

    Unfortunately, cutting up a credit card doesn’t do much to deter people whose obsession is online shopping or shopping network stuff. They could just memorize their number instead. Not having the physical number isn’t nearly as effective as being able to have all of your purchases outright rejected if you’re desperately trying to cut your ties to debt. The credit card companies would never willingly help you out with this, though.

    • nbs2 says:

      AT that point, I’d suggest they report their card as lost to the CC company and force themselves not to look at the card number when activating the replacement. Worst case, have a trusted friend come over to make the phone call and help you shred/freeze the card. Shred and you won’t know it until you get another replacement, freeze and you’d have a significant wait before you see it (of course, ideally you wait until you are back in black before using it).

    • ARP says:

      I had a friend freeze it in a block of ice. It would take her 15 minutes to thaw. She said that the thawing threshold was enough to prevent her from buying frivolous things.

    • DragonsPhoenix says:

      I shop almost exclusively online, and it sure is easy to click your way into trouble. Maybe because the exchange has a kind of unreal feel to it. To cut back, I started delaying all non-necessity online purchases a minimum of overnight, though usually I hold all luxury orders until Sunday night. Most places allow you to save your cart, and the next day I pick over it and trim the impulse add ons. This does mean you have to clearly define “necessity,” which I generally define as something I would head to a brick and mortar store for if I ran completely out of (e.g. toilet paper, toothpaste, soap, cleaning supplies, daily meal type food).

  7. props_nyc says:

    I always have to wonder where people that claim they get the better deal paying cash are shopping?

    With the exception of groceries most of my purchases are online where cash isn’t really an option.

    The only cash (rather, check) purchases I’ve been making recently are deposits for a wedding and those are certainly no bargain.

    • A.Mercer says:

      Part of that better deal is not paying for interest on what they buy. Now, if you keep your balances paid off then you pay no interest and you are in the same boat as the cash people. If you card has an annual fee then that is working against you. Add in any monthly, weekly, daily, hourly, minutely, secondly, and other incremental fees the banks toss in. If you have a good card and these are small or nothing then you are not too bad off.

      Cash only can be a worse deal sometimes. If you do not have a bank (or unwilling to use a bank) then cash checking places will really soak you with their fees. If you lose your cash you usually cannot call somebody and get it back. There are no charge backs for cash purchases either and usually the reward points are minimal.

      From what I have learned you need to use cash when necessary. Keep some on hand for emergencies. Use a card for most of your purchases. Debit is the safest way to go. If you need to work on your credit score then most debit cards will not help there so you will need a credit card. I would suggest a secure card to give yourself a bit of safety. In any event, always pay off your balances as soon as you can to avoid any interest. When selecting these cards, shop around and select ones that have no fees if possible. Credit unions are great places to find these. No frills but you pay what you …get…for (or something like that).

      • TasteyCat says:

        I do not pay any interest or other fees on my credit cards, but I do get rewards that I would not receive with cash.

        Credit is safest. Your liability is limited to $50, you can do a chargeback if something goes wrong (I did this once, and they immediately applied a credit to my account until the company reversed the transaction), and your bank account can’t be emptied out by someone going a spending spree or the resulting overdrafts.

  8. Khayembii Communique says:

    I make a point to use my credit card for purchases that I track, i.e. groceries and gas. This way I can track my purchases and determine what I am spending on them on a monthly basis. I suppose I could just keep the receipts but that is a hassle IMO when I can just pull it right off my CC statement.

    Then again I don’t really have credit card debt to get out of, I’m just trying to cut my expenses. I suppose opening tabs at the bar doesn’t help my cause. :-/

  9. Tim says:

    Can’t you cancel the account but keep paying it off?

    • Loias supports harsher punishments against corporations says:

      Yes, but I think it’s still important to have access to at least one credit card, if nothing else for emergencies.

    • Darraign the Sane says:

      Cancelling a card that has a balance left on it is horrible for your credit score, if at all possible, you should leave the card open, not use it, and pay it off before cancelling it.

      • Clearly says:

        “Cancelling a card that has a balance left on it is horrible for your credit score”

        Really ?? Please explain or provide references. I suspect this is a urban legend promoted by those who would like to see revolving credit card balances.

        Cancelling a card with a balance is a good way to prevent future charges and motivate faster repayment. It does not however remove the obligation to pay the balance. Failing to pay the balance will of course reduce your credit score.

        • Smudgepot_theATTackDonkey says:

          This is not a myth. The amount of unutilized credit that you have is factored into your FICO score calculation. And a couple of years ago they gave this more weight. The key here is “unutilized credit”. If you have a $2000 line and you’ve used $2000, well then you’re basically hurting yourself anyways.

        • Smudgepot_theATTackDonkey says:

          This is not a myth. The amount of unutilized credit that you have is factored into your FICO score calculation. And a couple of years ago they gave this more weight. The key here is “unutilized credit”. If you have a $2000 line and you’ve used $2000, well then you’re basically hurting yourself anyways.

        • Smudgepot_theATTackDonkey says:

          This is not a myth. The amount of unutilized credit that you have is factored into your FICO score calculation. And a couple of years ago they gave this more weight. The key here is “unutilized credit”. If you have a $2000 line and you’ve used $2000, well then you’re basically hurting yourself anyways.

        • Beeker26 says:

          When you cancel a card it lowers your credit to debt ratio, which is a huge chunk of your FICO score. You should never ever cancel a credit card unless you absolutely have to.

      • A.Mercer says:

        People should not worry about their credit score too much while they are trying to get out of debt. Their score will be hurt much more if their heavy debt load financially sinks them and they let the cards default. If you take a hit by cancelling the card but keep paying off the balance then so be it. The only worry is if there are added fees or raises in interest. Get out of debt and then work on rebuilding the credit.

        Now, lets say that you want to buy a house soon and you want to pay off your credit cards too. Set priorities. Get the debt under control first. In fact, get out of debt. Then use different methods to rebuild your credit but do not let your self get back into debt. For instance, use a card but keep it paid off. Keep all of your bills paid off on time. Things like that. If you keep your credit pretty but keep your debt and then buy a house then you have a financial land mine that could go off and really mess up your money situation.

  10. The Upright Man says:

    Can most debit cards be used as credit cards?

    I only realized this recently with mine. I can use it anywhere that accepts visa and it just takes the money out of my checking account.

    Are most debit cards like this or no?

    • pecan 3.14159265 says:

      Yes, but using debit cards ‘like credit cards’ isn’t how you think it is. All that means is that when you’re at the store and it processes like a credit card, you don’t type your PIN. All you do is swipe. That’s pretty much all it means. It doesn’t mean your money is spent a different way.

      Credit card users aren’t using debit cards, they’re running up balances on their credit cards, where the entire idea is borrowed money.

  11. aloria says:

    I’ve a bad habit of memorizing my CC numbers within a week of getting them. I’m just special like that.

  12. cara says:

    Had to learn this the hard way.
    I have ~$600 on a credit card that I’m struggling to pay off due to needing college supplies (I’m an art student), food, and gas (SUV). However, I can’t take it out of my wallet, since my parents will use it in case of emergency (I use it, they’ll pay off a certain item).
    And of course most of that charge was for a flatscreen I bought on sale because I was tired of lugging a giant TV to school.

    All this while work keeps cutting my hours because I’m only seasonal since I’m only home during winter and summer… and they prefer new hires since they make less.

    • Clearly says:

      A flat screen TV financed by a credit card ? Theres a lesson here.
      TV is not a necessity, flat screen or not.

  13. DeadFlorist says:

    Gotta love credit cards, the foolish and poor pay the credit card companies money and the savvy get paid by the credit card companies to use the service. The sort of upstream wealth distribution that makes casinos, the lottery, banks, and oranized religion so great.

    So how many more of these posts are we going to have? If you charge things on your credit card, and don’t pay it off, you are going to end up owing more through the magic of interest. To echo the mighty914, zOMG!

    How many more great secrets are to be revealed, perhaps you should freeze your credit card in a block of ice, build a grisly Saw-style contraption to maim you every time you use it, hire a dominatrix to whip you, or don a shock collar so you can zap yourself every time you make a poor shopping decision.

    Or you could just spend less by choosing to buy less stuff. It’s both easy AND economical, which was the point in the first place, no?

  14. The311Kid says:

    I pay my credit card off in FULL every month, so I’m not worried. One has to have a credit history…

    • TasteyCat says:

      Yep, the people who believe they can go cash only are silly. I don’t know how they expect to be able to get a car/house/rental/hotel/insurance/job without any credit history.

      • photoguy622 says:

        For most of these that’s not a problem. Buy a car with cash. Have your mortgage traditionally underwritten at a local bank that you use. Give a few months of rent up front. Use a debit card for your hotel.

        As far as jobs and insurance go, no credit history is better than bad credit history.

        • TasteyCat says:

          Buying a car with cash is foolish (if you have the money, you may as well take out a loan and pay it off early, since there are no prepayment penalties on most car loans), although I can see where it may be a viable option for some people. For a little bit of interest, you establish a positive auto tradeline, which will remain on your credit report for up to 10 years.

          If bank is stupid enough to give a mortgage to someone with no credit history in this post-bubble era, the best you can hope for is a ridiculous interest rate. With a single interest point being worth tens of thousands of dollars, you could be looking at hundreds of thousands of extra dollars compared to somebody with good credit.

          Extra rent up front may be acceptable with the right landlord. It’s not the best use of money, but it’ll work in a pinch. The worst case scenario is that they take the money and run, which in this day of high foreclosures is an increasing possibility.

          Hotels will place a hold on debit card transactions on estimated incidentals. While these potentially hundreds of dollars will/should be returned within a few days, anybody who runs paycheck to paycheck is asking for overdrafts.

          I don’t know that no credit is necessarily better than bad credit, but good or even average credit is better than both.

          • veronykah says:

            Why pray tell does one need to establish an “auto tradeline”? I buy cars in cash and not only save the BS of dealing with a loan, I also save on not having to insure my car 100%. I like to own my things outright.
            Not to mention, if I take out a loan and pay it off immediately I won’t show a history, therefore it seems useless.
            I have plenty of credit history, I don’t need a car loan.

            • TasteyCat says:

              When deciding your rate, many companies will pull an auto-enhanced FICO. No previous car loans means you get a higher rate, no matter what the rest of your credit profile looks like.

              Are 100% you sure you’re going to be able to pay cash in 10 years? A credit rating isn’t about what you could do today. It’s a safety blanket for tomorrow.

              I’m not saying pay it off immediately. I’d pay it off over 6 months or so. You could get away with doing this for a hundred bucks or so in interest. While it won’t have the same impact of a 24 or 36 month payment term, it’s nonetheless a positive that shows you pay responsibly, which cash does not do.

        • samonela says:

          I used to think this way as a young adult…then I learned how to play the credit game and how to use the rules to my advantage. If you go to the PBS website, search for an old documentary titled something along the lines of “The Secret History of the Credit Card”. The part with Ben Stein is priceless (no pun intended). The info is a bit outdated with the new credit rules, but much of it is still very applicable. It really did help me start to change my own outlook on credit. My favorite part (that sticks with me to this day) is how the credit companies refer to guys like Stein as a “deadbeat” because he pays his balance off every single month. They make ZERO money off of him and he uses it as a free loan. It’s the uneducated, uninformed folks that put themselves into unnecessary debt that really gets them rubbing their hands together and salivating…

          Don’t go into debt = staying ahead in the credit game.

  15. SylarCx says:

    I used to be an “in case of emergencies only” type for my credit card and then I’d pay it off in full or at least before interest could be charged.

    However, with the new CC rules, I received word that I would be charged an “inactivity” fee on my card. So I started using it to make regular purchases that I would have otherwise done with cash (like groceries, gas, date night, etc.) and then paying those purchases immediately through my online banking…often times as soon as I got home I log on and pay it off just so I knew I wouldn’t forget about it.

    After a while of doing this, I realized that I get 1% cash back on all of my purchases at the end of the month. So now I now what people mean when they say have your CC pay you! This cash back put $100 toward my $400 root canal making just a little bit less of a hit to the wallet that month!

    It sure feels good (especially in the last 2 days of the month) to look at my credit card statement and see this at the bottom:

    “Interest Charged in 2010: $0.00″

    • Hi_Hello says:

      becareful of paying too frequently. I”m only allowed to pay twice in a billing cycle. I pay in the middle and at the end of the billing cycle to make sure my balance is zero.

      • A.Mercer says:

        Wow. Never had a problem like that with my card. I go online and pay off the balance a couple of times a week. It is a card thru my credit union so that may be the difference.

    • TasteyCat says:

      I use a 1% on miscellaneous purchases, but there are options that may be even better. Citi Forward gives 5 points for books, movies, and restaurants (Amazon is classified as a bookstore), so I use that on those categories for what works out to 3-4% or so. Penfed gives 5% on gas and 2% on groceries. They’re difficult from what I have heard, so I joined without a CC app and am awaiting the preapproval that will hopefully pop up one of these quarters.

    • Bibliovore says:

      If you’re paying it off in full, you may do even better to schedule automatic payments to take place on the due date, earning interest on that money until the payment is actually due. Of course, if making the same-day payments makes it easier for you to watch and control your spending, you’re better off continuing to do what you’re doing. Regardless, congratulations on no longer paying interest! 8)

  16. dkreichen1968 says:

    You can also write your credit card company and close it so you can’t use it. Then just pay the balance and be done with it. A credit card can be a great tool if, and only if, you pay the balance monthly. They can save you money and build your credit rating if it is a no annual fee cash back card that you pay off monthly. Just remember, never let your crazy, irresponsible, significant other gain access to it. That is unless you want your credit to be destroyed forever.

  17. operator207 says:

    If you have the ability to say “No!” then using a credit card and *paying it off every month* is ok. I do this, I pay mine off every paycheck (contract worker at the moment, getting paid weekly) I don’t rack up finance charges.

    I started doing this after my debit card (being used as a credit card) was swiped, and used to buy $450 worth of stuff at a Walmart. It didn’t clear me out, but it would have a couple years ago when I was having to live paycheck to paycheck (and credit card debt-free mind you).

    I use my CC as a buffer. If someone swipes this one, ya they could run it up, but they are not going to be hitting my checking account, and I am not going to wait 2 weeks to be reimbursed by the bank. Can’t pay the bills very well without cash.

    I use what works best for me, and gives me the best buffer for the least amount of headache and loss of cash. If you can say “No!” to just spending until your account is empty, this may work for you too.

  18. cjnewbs says:

    Also bears shit in woods.

  19. Amy Alkon says:

    Somehow, I’m able to understand that buying things with my credit card will result in a bill that must be paid at the end of the month (and ridiculous interest payments due if the bill isn’t paid in full), so I don’t buy more than I need or more than I can pay for.

    Okay, if you’re 20, and just got your first card, maybe you run up a bill once or twice. But, otherwise, it just takes simple math and a smidgen of self-discipline to not go overboard…doesn’t it?

    • Smultronstallet says:

      Unfortunately, it seems most are too dumb or ignorant to figure this out. Or maybe it’s a lack of self-control and the result of living in “consumerist to the extreme” culture?

  20. zantafio says:

    I use the paypal debit card and I think it’s the perfect solution.

    - it is linked to my checking account, but has a daily limit that I can set between $0 to $1,000 per day.
    – I get 1.5% cash back on all purchases at the end of the month
    – if there is not enough fund, the transaction is denied, no overdraft!

  21. zantafio says:

    Another headline that could be from the Onion, tweak a few words: “Area man stops using credit card, reduces debt”

  22. Nerdhouse1 says:

    It does sound obvious but I stopped using my credit cards a year ago & I’m closing on a condo in mid January, I was surprised by how quickly my credit score went up after settling debt & using sparingly.

  23. jp7570-1 says:

    I keep two cards – one for personal expenses, the other for business purchases. One has airline points, the other a cash-back rebate (credited at the end of the calendar year). I do not carry a balance and pay each card off in full each month. Each card has an annual fee ($75 for each), but the cash-back rebate is more than the $150 total, so the result is no net fee.

    I did have a third card for international business travel. However, I found over the last two years that my international travel went down significantly due to the economy (duh!). That card carried a very high annual fee ($495) so I just canceled it this month and have not looked back.

    There should be little impact on my credit score because I hardly used that card for the last two years. Also my useage of the other two cards was also very low, so even though I reduced my overall combined credit limit a bit, the percentage of use of that limit was fairly low.

    Bottom-line – most people can get by with fewer cards than they have. I have found two to be an ideal number – you can separate purchases as needed. You also have a backup in case one card has a problem (or is lost). For me, three or more cards was simply not necessary.

    Oh and by the way, most business still take the green stuff (cash) and checks. When you can, ask for a discount if you pay in cash, as the merchant does not have to pay any credit transaction fees. I have found you get more discounts than you might think. My experience has been that discounts are usually in the 15% to 20% range. That’s for me, your discount may vary.

  24. christador says:

    I can’t believe there has not been a mention of Dave Ramsey. For those of you who can’t wrap your head around not using credit, listen to just one or two of his free podcasts–he will change your way of thinking. I got on his plan two years ago (to the day, actually–it was my resolution in 2009) and I will officially be debt-free except for my house this Tuesday when I make my final payment to HSBC.

    A debit card offers the same protection and benefits as a credit card without the B.S. Don’t worship at the altar of the great FICO–I don’t care if my score is zero–I am stockpiling cash so I don’t need credit and if I do I’m pretty sure my local credit union will help me out if I get in a pinch. But with everything paid for I just don’t see me going back.

  25. Smultronstallet says:

    A good preventative measure would be not getting a credit card in the first place. Or if you do get one, only get one. Also, don’t buy that new TV, computer, ipad, phone or whatever fancy new gadget is being advertised at present. You don’t need any of those things.