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How to Know If You Should Cancel Your Credit Card


Credit card spending isn't always a bad thing, but in the hands of certain spending personalities, it can lead up to major debt.

After paying off my credit card, I realized a valuable lesson about myself--I can't handle having a credit card. It's embarrassing to admit, considering I love to dish my learned financial "wisdom" on this site, but it's the absolute truth. For certain spending personalities it is absolutely dangerous to own a credit card--even for emergencies.

If you continuously max out your credit cards, are late on your bills, or have trouble paying them off, you shouldn't have one. That sounds like everyone, right? Well, it practically is everyone. There are few people who can truly manage a credit card the right way--where you only buy what you can really afford and pay the balance off at the end of a month or two. Although I know you aren't supposed to max out the entire card, I don't have the self discipline to not blow it. And let's face it, we never use our credit cards for actual emergencies.

When you're young, it's okay to get a small credit card (with a $500 limit or less) to first establish your credit. Track how, when, and why you spend on the credit card. How are you using the card? When do you buy things with it? If you don't max it out and can pay off your balance at the end of every month, you're probably okay to have one--just don't get crazy when they up the credit limit. However, if you go on massive shopping sprees, make foolish purchases, and max it out, you should get rid of it.

If you're already in credit card debt, do yourself a favor and cancel the cards so you aren't tempted to spend on it when you pay the balance down. Work hard to pay off the balance. You'll find that once you start spending your own money, you don't have to worry about owing anyone anything--and that can make life a lot less stress free!

Posted on July 15, 2011 at 7:00AM | Permalink | 0 Comments


posted by
7/15/11

At one point I had $18,000 in credit card debt. My boyfriend, now fiance, showed me how much money I was losing to interest over the course of a year and I was shocked. That shock made me more responsible with my credit card. I'm not credit card debt free but still use my credit card regularly...I just make sure I can pay it off within a month or two. And yes, the five year process to get rid of the debt did include closing out quite a few credit cards, mostly store cards.


posted by
7/15/11

I have never ever carried a balance on a credit card in my 10 years of having them. I think it is super important to live within your means and understand how much you have to spend by carefully delineating the difference between "want" and "need." To be honest, I find that I spend more when I use cash than credit because I lose the paper trail of where my money is going. Also, it is important to know that having good credit is essential to making large future purchases like on a car or house. It always surprises me that actually having more lines of credit open (and paying them off!) helps in really increasing one's credit score.


posted by
7/15/11

This post completely ignores one very important element to your credit score- credit history. Your credit score isn't just based on how much debt you have, but also on how long you have been using credit. It seems odd that that would affect your score, but it does. You are much better off paying off your debt, but keeping the accounts open. If you truly can't be responsible with your cards, put them in a drawer, keep them out of site, or if you really need to, cut them up. Then you won't be able to use the cards, but the account will still technically be active and helping to build up your credit score.


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