Credit cards can offer unparalleled convenience for the financially disciplined consumer. For those that are still learning to tame the temptation to spend credit cards can be a source of frustration and anxiety. If you find yourself in the latter category it is probably time to pitch the plastic.
Other times that suggest a credit card moratorium may be in order:
1. Every time the phone rings you fear a bill collector is calling. (Ignoring the problem will not make it go away. Instead, take a look at your budget and make a realistic assessment of when you will be able to make a payment and how much it will be. Report this information to your creditors. If possible avoid their insistence that you make a check by phone payment as these are generally very expensive. You may be able to schedule a future payment online for free.)
2. You train your children to screen for bill collectors and say you aren’t at home although you are. (As the saying goes, children learn by what they live. It is important for parent’s to model sound financial management and honesty whenever possible)
3. Your credit balances are consistently at or near their limits. (It can be discouraging to open a credit card bill that reveals a huge balance. The only reasonable solution is to stop spending and to make the largest payments you can afford. Your balances will decline with time)
4. The credit card debt you carry is so old you can’t even remember what it was that you charged in the first place. (Always spend with a plan, especially when you use a credit card. Studies have shown that the average consumer spends more when using a credit card than with cash. Resist that temptation by spending with a plan)
5. You are using your credit cards to purchase non-essential items you could not otherwise afford. (If you can only get those movie tickets or Thursday’s lunch using credit consider brown bagging it or staying home with a good book or rented movie)
6. The minimum payment due doesn’t even cover interest expenses for the billing cycle. (This scenario can be very overwhelming but you can turn it around by making a commitment not to add any additional debt to the balance)
7. You have charged so much on your credit card that you have no available credit for emergencies. (When you got the credit card you probably imagined that it would be a good fallback in the event that your car needed repair or you had another emergency. Now that it’s maxed out you have no emergency option and a lot of headache instead. Instead, payoff your debt and get rid of the cards if you honestly cannot control your spending and keep some cash reserves for emergencies)
You can probably identify other scenarios based on the way you feel when you think about your credit cards. For example, if just the word credit brings up anxiety and dread (and you cannot imagine cultivating the discipline required to modify your spending habits) you should probably consider getting rid of all or at least some of your cards.