One of the most popular methods for getting out of debt is to cut up your credit cards. While this may seem like a drastic measure, it’s actually one that many people find success with as they work their way towards living an “all cash” lifestyle.
The benefits of cutting up your credit card are obvious. The ability to buy on impulse is gone and you’re forced to think before making a purchase. No more worrying about how much money is in the account or if there’s enough cash at the end of the month – it’s all about budgeting now!
There are pros and cons to cutting up your card so before you make any decisions on what method will work best for you, be sure to explore all possible options and weigh them against each other.
But deciding whether or not to cut up your credit card can be tough. Here are some pros and cons to help you make an informed decision to cut up your credit card to get out of debt.
Pros Of Cutting Up Your Credit Card
Cutting up your credit card is a great idea for many reasons. You’ll save money, you won’t be able to make impulsive purchases, and don’t have the hassle of worrying about how much cash will last at the end of each month!
Here are more tips to convince you that cutting up your credit card is a good idea.
Pay Off Debt Faster
Here is the first reason why many people cut up their credit cards. It is a means of paying off credit card debt faster than it would normally be paid.
Instead, using this method allows consumers with more disposable income other than just one source. Now there is no cash flow available for you and eventually nothing left that can fund any emergency expenses. That’s why many people opt for paying down their credit card balances as soon as possible after making monthly payments.
By not paying off your credit card balances in full each month, you may be charged with late fees which cost you more compared to how much you earn as interest rates compound over time.
Many people resort to cutting up their credit cards as a solution for paying off debts faster. Add the debt snowball method to the chopping, and you are well on your way to paying those debts off for good.
Debt is nobody’s friend. The more you use credit cards, the faster the balance builds, and the harder it is to dig out from under the pile.
Learn more about why being debt free is important here.
Save Money In Interest And Annual Fees
You may be wondering why your credit card statement is so high when you’re sure that the only thing you bought was a coffee at Starbucks.
When we use our credit cards, it can make us feel like everything in life is within reach. We don’t have to save up for things because they are easily available on plastic.
This convenience comes with consequences though and those come out in high-interest rates as well as late fees and annual fees which end up costing more than just what we spent originally! It’s important to not take this lightly or else your shopping habits could really cost you big time over time.
Making minimum payments doesn’t help.
Not only do you not solve your problem, but it also worsens over time and with accumulated interest and penalties which may end up costing you more than you spent in the first place.
Not having credit cards saves money. Debt consolidation and debt payoff save money.
Streamline Your Spending
People often feel better about streamlining the mess of cards they’ve acquired over years. It’s safe to say that no one loves carrying around credit cards, which can make them burdensome and inconvenient. But did you know they are also a cause for concern in terms of personal finance?
According to Cardrates.com, the average American carries four credit cards and in 2019, “75% of consumers with credit cards carry an average balance of more than $6,200 on their accounts”. This could lead to spending too much on interest rates or forgetting about funds altogether.
Now might just be the perfect opportunity for some spring cleaning!
Fewer Bills To Manage
One of the best parts about not carrying a credit card is that you have fewer bills.
Imagine what life would be like if we weren’t swamped with managing our finances every day–it’s true, without cards there are fewer monthly financial responsibilities.
It’s always refreshing not having the constant hum of debt looming over your head, constantly reminding you about how much money is owed to creditors each month.
With no credit cards or other forms of payment that need managing on an ongoing basis, there are fewer responsibilities when paying off debts and your bank account will benefit!
Cons Of Cutting Up Your Credit Card
Harder to get credit
It can be hard to get loans from banks without a line of credit and will take time for new habits to form and for you to build up savings. You’ll need a plan and will need to think before making purchases.
This really just takes a little more planning. Instead, you will need to save for things like furniture and cars. As far as buying a home, it’s not going to be as easy but it can be done. Look for a mortgage broker who works on manual underwriting. This is the old-fashioned way of getting a mortgage.
Cutting Up Your Credit Card Is Inconvenient
Some people may choose not to cut up their credit cards because they perceive it as being more of an inconvenience.
For those who often travel internationally or shop online, having credit cards can be beneficial. Making reservations and renting a car could also prove to be more of a challenge.
Many would rather have Visa, Mastercard, and American Express in their back pockets for a night on the town.
Having a debit card can take the place of a credit card in almost all of the scenarios that you can think of here. Except, you need to have the funds available instead of “borrowing” from the credit card company and paying them back.
It’s better to just cut up credit cards to get out of debt and be done with it.
What If There’s An Emergency?
Without having access to it for emergency purposes, you might end up with no way out and eventually deeper into financial troubles. This is the biggest reason I hear from my coaching clients to hold on to credit cards.
However, having a substantial 3-6 month emergency fund would debunk this myth.
Spending Is An Addiction
The fact is many people who tend to overspend do not want to give up something that allows them to buy things they really desire or need.
Instead, the feeling of spending money out of control can be very addicting and even seductive. A lot of people who continuously use credit cards as a means to buy things they cannot afford are the ones who fail in cutting up their credit cards because having that access is very important to their livelihood.
How to cut up your credit card.
When deciding how to dispose of a credit card, consider these ideas:
First, close your account at the bank. Make sure the account is not active so if someone doesn’t get ahold of this information, they cannot hack your account or steal your identity.
DO NOT DISCARD IN THE TRASH!
Dispose of them by throwing them away via garbage disposal or shredder if available but make safe sure that there is no way someone else can use them with personal information available.
I’ve heard of people disguising their credit cards in cans or old containers of food in the garbage. It’s not the worst idea because who would dig through moldy sour cream to get ahold of a credit card?
Your best bet after shredding it is to cut it up with scissors into small pieces making sure that the numbers are all on individual parts.
Then, go around your home and throw each piece into a different trash container. That way, the entire credit card number is not all in the same place making it virtually impossible to glue back together.
Does cutting up your credit card hurt your credit?
You don’t need your credit card to live, so why keep it? If you can manage without a credit card for three months then you should try cutting it up.
It may hurt your credit report but the risk might be worth it.
The benefits of cutting up a credit card are endless. From being able to prevent spending to stopping others from charging unauthorized purchases on your account. It’s no wonder why so many people have taken drastic measures in recent years with their own cards and cut up credit cards to get out of debt.
Why Would You Cut Up Your Credit Card?
The benefits of cutting up a credit card are endless. From being able to prevent spending, and also stopping others from charging unauthorized purchases on your account, it’s no wonder why so many people have taken the drastic measure in recent years with their own cards!
Cutting out this crutch has helped countless individuals get back into shape financially by eliminating any form of temptation that would otherwise be present when using plastic money at all times.
Gone is the worry about missed payments and interest accumulating. Gone is the worry about your debts building up to the point of overwhelm.
Just imagine how much less stress we’d have if our constant worry to pay off debt wasn’t tied so closely with the idea of using credit cards.
It is definitely a great feeling to know you are in control of your finances and spending decisions again; let’s face it, how many times have we all said “this was supposed to be my treat” after we’ve already purchased something on our credit card?
With an option like cutting up your card, there will never be any reason for justifying what you’re doing by telling yourself that “I’ll pay for this later.”
While there may be some people who choose to cut up multiple cards at once, others prefer to do so one by one over time. But replacing credit cards with cash, checking accounts, debit cards, and other products and services will reduce your financial anxiety.
It really just depends on what method works best for you, but either way, you decide to handle it, you can definitely be sure that it will free up your mind from constant worries about money and spending impulsive purchases. It’s a great feeling to know that no one is going to have the ability to use your credit card without asking you for permission first!
Once you go through this process, which will essentially force you to take full control of your life and finances, you may find that it’s something you’re quite good at!
But whether or not this makes anything easier for you, in the end, it will surely give you a sense of accomplishment knowing that you are handling every aspect of your financial well-being without relying on banks and credit card companies to loan you money all the time. And the feeling that you cut up credit cards to get out of debt will be its own reward.
Final Thoughts On Should I Cut Up My Credit Card To Get Out Of Debt?
Unfortunately, canceling or cutting up a credit card is not enough on its own; if we are really serious about getting rid of our debts and getting out of debt, then we need to actually take control over our finances.
This is where we really begin feeling good about what has been able to accomplish – but the most important thing for us to remember is how easy it was once we had a plan in place that would help us get rid of debts and stay that way for the rest of our lives.
Do you know how much credit card companies charge you just for “renting” your plastic? You’re being charged every single month whether you use it or not. So, when all is said and done, it is probably best for us to cut up or cancel our credit cards if we are trying to get out of debt.
Although there are many pros and cons associated with the idea to cut up credit cards to get out of debt as well as other financial products as a solution for getting out of debt, keep in mind that the advantages outweigh any disadvantages by far.