How to stop using credit cards

Credit cards are a double-edged sword. Used responsibly, they can help you build a credit history, earn rewards, and gain convenience and security. Use them recklessly, and they will become a source of debt, stress, and financial hardship. If you find yourself in the latter half of credit card users, learning how to stop using credit cards can be the key to getting out of debt and taking back control of your spending. 

Falling into the temptation of relying on your credit card happens to the best of us. Almost half of U.S adults are now living with credit card debt, burdened with stress and worry[1]. When you carry this debt, it feels like no matter what you do, your balance never seems to go down, and not using your card seems like an impossible goal. 

This goal is not impossible. You can stop using credit cards and press the reset button on your financial health by following a set of simple steps.

But first, stop and consider. Is canceling your cards the solution you need?

Should I Cancel My Credit Cards?

You’ve probably heard some financial gurus advise you to go cold turkey and cancel all your credit cards. But before you pull a Michael Scott, cut up your cards, and shout I DECLARE BANKRUPTCY, there are a few things you should consider. 

The Office - Michael Scott cutting credit cards

It May Only Be A Short-Term Fix

Canceling your credit cards can help you pay down your debt and control your spending. Many people swear by this method. But is this extreme approach a long-term solution or a short-term fix? 

👉 After taking David Ramsey’s popular Financial Peace University course, Laura Dunn revealed that canceling her cards was only a temporary solution to her bad habits. Once she paid off her debt, she began using credit again and noticed she was still falling into the same spending patterns. It was only until she decided to keep her plastic and rely on self-discipline that she changed her behavior for good. 

It Affects Your Credit History and Score 

Canceling your credit cards will remove files from your credit record. This can damage your credit score. If you have a thin credit file and your cards are your only credit accounts, the credit bureaus may not have enough information to generate a score at all. Nonexistent credit will make it difficult for you to buy a car, get a mortgage, or even rent an apartment. 

🤔 What about closing only one of them?

Closing even one credit card can hurt your credit score by increasing your utilization ratio, which is the percentage of your available credit that you actually use. If you have multiple credit cards with high balances, closing one of them can increase the overall amount of credit you’re using because you’re reducing the amount of credit available to you. 

You May Still Need It 

In certain situations, credit cards can be a lifesaver. Things like booking a trip or renting a car would become challenging without one, while some cards carry insurance benefits that give you a reason to carry them at all times. 

☝️ Ultimately, if you feel like the only way to stop using your cards is to cancel them, you should do what is best for you. Before you do, however, carefully consider how it may affect you in the long run. 

How to Stop Using Credit Cards Using 6 Practical Steps

Becoming reliant on a credit card is like an addiction. Once you become addicted, you’ll need commitment to quit, especially when you’re constantly paying interest fees or penalties. 

To help you overcome this addiction, I’ve compiled a list of strategies that can help you reduce or eliminate your credit card use and build the self-discipline to use them wisely. 

1. Track Your Spending 

Once you recognize that your credit card use has become a problem, the first step to recovery is tracking and observing your credit card spending without judgment. This will help you identify areas you need to improve and spot unhealthy spending patterns. 

You can do this by keeping a journal and writing down all your credit card purchases for a month, or you can use an app that tracks your spending for you. 

💡 I encourage you to try using a pen and paper, as writing things down makes you more present. By being present, you become aware of your financial habits and start to gain insight into the reason behind your uncontrolled credit card spending. 

2. Put Your Cards Away

Putting your cards away is a great alternative to canceling your cards. By still owning the cards but choosing not to use them, you can teach yourself restraint and self-discipline. Once you learn this, being around your cards again will not have to result in misuse. 

You can get rid of your cards in any way that works for you, including:

  • Freezing them in a block of ice (a surprisingly popular choice).
  • Handing them over to a friend or family member who will keep you accountable.
  • Locking them up in a safe.
  • Cutting them up.

Don’t forget to delete any credit card information from frequently used websites! This will remove the temptation to use your card for online shopping. 

If you choose to stop using a card, remember that active credit accounts help your credit. Consider putting a small recurring expense on the card, like your internet payment or Netflix subscription. Set up a pull payment from your checking account to pay the bill automatically.

This will keep the card active, keep your credit utilization low, and make sure it’s paid on time. Just be sure you have money in your checking account to cover the payment!

3. Use Cash  

Using paper money has become almost odd in our increasingly cashless society. But when you’re trying to stop using your credit cards, cash is your best friend. 

A popular study conducted by analytics and insights company Brad & Dunstreet found that people spend 12-18% less when they use cash instead of credit cards. This happens because when you’re using cash, you’re spending your own money, and you appreciate its real value. 

The opposite is true with credit. When you’re using a credit card, you’re a lot more reckless with your spending because of a phenomenon called payment coupling: you’re more willing to spend at the moment for something you can pay for later. 

🤔 Using cash makes you mindful of your spending and helps you re-discover the true value of your money. 

4. Lower Your Credit Limit 

If you’re an impulsive buyer and you haven’t build self-discipline, having a high credit limit is an invitation to spend. It’s easy to get tempted when you see “$5,000 available” on your banking app, and because of psychological ownership, it’s even easier to forget this is borrowed money from the bank and not your own. 

To remove this temptation, many people choose to lower their credit limit. By not having access to a lot of credit, you learn to stick within a certain “budget.”

💡 Before you do this, you should use a credit utilization ratio calculator to see your new ratio, as lowering your limit can affect your credit score. As a rule of thumb, you should be using less than 30% of your credit limit.

5. Pay Down Your Balance 

If you’ve racked up a hefty balance on your credit card, one of your main priorities should be to start paying it off. Making this a priority in your life forces you to focus on saving and cleaning up your debt instead of spending. 

If you’re not sure how to start, check out our guide to getting out of debt, which includes strategies proven to help pay down your credit card debt. You can also create S.M.A.R.T. goals to pay off your full balance by following our step-by-step instructions here

💪 When you put one of these strategies into practice and start seeing progress, you will feel empowered and more in control of your spending. It will also make you think twice about misusing your credit card again. 

6. Get Support 

As the saying goes, if you don’t ask, you don’t get it. Asking for emotional or financial support can make a world of difference when you’re trying to cut back on your credit card spending. 

Emotional support has been proven to decrease your stress levels when dealing with a difficult life situation. A loved one can not only hold you accountable for your progress, but they can encourage and motivate you when you need it most. 

You can also turn to your credit card company or bank for help. There are many ways solutions they can offer you, including:

  • A low-interest loan you can transfer your credit card balance to.
  • A lower-interest credit card.
  • The option of consolidating your balances. 
  • A payment plan if you’re struggling to make your minimum payments.
  • Hardship plans for people facing problems they can’t control, like medical bills or job loss.

🙏 Your financial institution or advisor can offer you free advice and solutions. But you won’t know about it until you ask!

Final Word 

Credit cards are not inherently bad or good. After all, they’re just pieces of plastic. 

Credit cards are a tool. They can help you or hurt you, depending on how you use them. When you learn to use credit cards wisely and cautiously, they have many advantages. I’ve even used my credit card points to buy flights or enjoy free wine tastings. 

When you treat credit cards as your own money, they become dangerous. If you find yourself in this situation, don’t stress. Take a deep breath and start implementing some of these strategies. Over time, you will learn how to stop using credit cards the wrong way. 

What tips have we left out? Let us know in the comments below!