DISQUS

Will · 1 year ago

Correct on all points.

Just in case someone reading this post still needs some convincing that they should break their credit card habit, I suggest they take a look at this post about the credit card industry's "trips and traps" to keep them in debt: link

I believe you will come back here after reading it and implement this 10 step plan ASAP.

Julie · 1 year ago

I'd have to agree with Dave's version of the snowball, just because I've tried it both ways and having a $0 balance was much more of an incentive to keep going than "Oh, look how much interest I saved on this huge balance I still have left!" Putting a chunk of money toward the high interest balance and seeing barely a blip in my total amount due was very defeating. But everyone's brain works differently. :)

I'd also reinforce what you mention in the Debt Avalanche - 3 to 6 months expenses in the e-fund is ideal, but start with $1000 and focus on paying off the debt, especially since the interest rate on your savings account is probably less than the ones on your credit cards.

And it's dangerous to ignore your credit score *too* much, just because it can effect everything from getting a job to finding an apartment to rent. Destroy the extra cards, definitely - but I'd be wary of closing them unless the ratios of available credit to credit used on the lower-rate were extremely low. And that could be one more psychological blow, to do the "responsible" thing and see your score plummet.

Yana · 1 year ago

Good article. I began as a type B, then changed to type A, and finally came to the point where I will not use credit. There are rare exceptions, like when a department store will give a discount for using its card. I'd rather pay outright, but will use the card and pay it off immediately. I rarely use cash, preferring debit cards.

As far as how best to destroy the credit cards, this looks like the best way to me: link You don't even have to find different disposal places for the pieces!

Well, the idea is good, but I don't endorse the product ;)

kitty · 1 year ago

"On the other hand, Type B users, who don’t pay interest or fees, are shifted to cards with higher interchange fees."

I've always been type B, never paid a penny in interest, but as of yet nobody switched me to another type of card as far as I know. The only thing that came close was a recent letter from AmEx with an application for a different card - the one that simply requires payment in full each month - "just right for you", in addition to the one I have. The letter claimed having this card will "increase my flexibility". Sounds fine - since I pay in full anyway, what is the difference, right? Oh, but there is a catch - after 1st year this new card has $150 yearly fee. Needless to say I shredded the new application. But they didn't take away my free cashback card, they just wanted to steer me towards their other card I suppose.

Our Monmouth · 1 year ago

Great advice-

Credit card companies today are nothing more than loan sharks. As the current credit crunch moves into unsecured debit credit card companies will pay a price but the consumer will again take it on the nose.

Adfecto · 1 year ago

I like your suggestions. I've enacted most of them. I'm making measurable progress using these ideas. I'm still taking a few steps forward and one or two backward, but this really can work.

Remember, if you don't have the card in your wallet it is impossible to use it!

Mydailydollars · 1 year ago

Great advice! Unfortunately, I was so a "Type A" user. Your right it's a psychological habit that you have to break. I'd add one suggestion: some form of accountability. Having a blog where I post all my spending is really forcing me to stay on track!

Jesse · 1 year ago

Good consolidation of ideas. For my life Ive swung pretty wildly back and forth between type A and type B. ..which I think is the story for a lot of people.

Mark · 1 year ago

I had never heard about credit card companies moving people to higher transaction fee cards if they weren't making money with them. I have noticed that my rewards points are only worth about half of what the use to be.

Finally Frugal · 1 year ago

Wonderful post! I'm less than $3,000 away from my goal of no CC debt, and I'm getting more excited every day. I locked away my credit card, and this has helped; in the past, I've promised myself that I would pay off the card, and then just used it again and again, for 'little' things. Well, those little things add up!

I used to be an 'A', now moving to a 'B'!

Kevin · 1 year ago

I know when I first received a credit card I was a type A user. After years of making the credit card compaines rich I have learned better. You make some great post.
Thanks

Steve DiFabio · 1 year ago

Breaking the credit card habit is a hard habit to break especially if you have no sense of money. When people get in to deep with debt it's very hard to get out.