Chances are you're one of the millions of Americans who have problems with credit card debt. You may have used the power of the credit card for impulse buying, shopping sprees, or dinners at an expensive restaurant. Most people do not keep track of their credit card use, and end up with a lot of unpaid bills. The solicitor of the credit card company may even call you up at home and remind you to pay up your credit bills, or else they'll be forced to take action.
When faced with a problem, it's best to get at the source. There are many ways to get rid of credit card debt, but often the best way is to get rid of the credit card itself.
What is a Credit Card?
When you run a bit short on money, you can use a credit card to pay a bill if the establishment accepts them. Think of credit cards as loans that your bank or credit company allows, provided that you pay the balance plus interest in full. A credit card is a very convenient, secure way for you to buy things and to enjoy the finer things in life, but you have to pay the bank every month to settle your balance.
Credit card companies assume that you are able to pay for the outstanding charges to your card within a set amount of time. Credit card debt usually does not come from the actual charge, but from the interest you pay from not paying the bill in full on time.
To put things into perspective, you can think of a credit card as a heavily disguised debt that can put your financial future and security in jeopardy. There are many hidden charges, arrears, and fees that your credit card company can charge without you knowing it. Credit cards are marketed to people with a secure financial prospect and who are mature with their spending habits.
Make a Commitment
Even the smallest of debts can potentially turn into a financial nightmare. When you finally decide to get rid of your credit card, you have to make a commitment not only to get rid of it once and for all, but to keep your expenses in check. Some people may make a promise to get rid of the credit card, but end up applying for another credit card. There are two goals of getting rid of a credit card:
•Ensure financial security. When you get down to it, a credit card is a very convenient kind of debt. All debts can mount up and potentially ruin your finances. Millions of people owe banks and credit card companies millions of dollars just in interest charges.
•Enforce financial discipline. A credit card is easier to fish out of your wallet than money. Credit cards may be convenient, but you may end up abusing them for even the simplest purchases like groceries or meals. The more you can keep track of your expenses, the more money you would save.
Have Your Credit Card Canceled
The best way to avoid credit card debt is to go to the bank and have your card canceled. There should only be three cards inside your wallet or billfold:
•Identification card or driver's license
•Social security card
•Automatic teller machine card.
Aside from these three essential cards, any other card is either optional or unnecessary. You may want to hang on to your discount cards, especially if you buy from the store or eat out at the restaurant often.
If you do have a credit card, you should seriously ask yourself why you have one, and what can you use it for. Most people think that credit cards are useful for “emergency purposes.” While there are emergencies that need a credit card (like if the ATM service is down and you have to pay for a meal at a restaurant), there are not too many cases where a credit card is absolutely necessary. You can talk to your bank or credit card company about how you can cancel your credit card subscription.
Hide Your Credit Card
An old saying goes, “Out of sight, out of mind.” If you don't see your credit card or bring it along every time you go out, you can avoid ever having to use it. Here are some ways you can put your card get out of your sight:
•Have your spouse, a family member, or a trusted friend keep it for you, as long as they swear not to use it for purchases.
•Keep it sealed in a tamper-proof bag and hide it at the farthest corner of your closet where you can't reach it.
•Keep it nestled inside a book you don't read, and hide that book.
Spend In Cash
You can practice financial discipline if you pay for all your purchases in cash. Credit cards allow you to be more flexible with your spending, which sometimes means that you would spend money on things you don't need. If you spend in cash, you buy only things you need. It's easier to keep track of actual money than to keep track of your credit limit.
Cash spending is recommended by many financial planners because you are more aware of the value of money than the value of a credit card. Hard currency allows you to budget your spending without having to resort to the “emergency” credit card.
Don't Apply For Another Credit Card
If you have already canceled your credit card, don't apply for another credit card with another company that offers a “reduced interest rate.” Some credit card companies may be scams or hoaxes. You may end up in a money laundering ring or worse, you may even end up with a useless plastic card.
Many people get to live financially secure lives without a credit card. The moment you get rid of your credit card, you should start to live a thrifty and frugal life. When you make the commitment to get rid of your credit card, stick to it. Pretty soon, a financially secure, prosperous,and debt-free life will be just within your reach.