This is a splendid guest post from Jonathan of MasterYourCard. While he sees the credit card as a tool, it’s one that’s being heavily misused. Therefore, he advocates mastering it, and blogs on the subject. However, there comes a time when some people realize that they’re not meant to have a credit card at all. Not unlike joining AA, they have to quit it entirely. He describes 10 signs that you might be one of those people. If you like this post, why not subscribe to the MYC feed?
Credit cards are such a common fixture of society that sometimes we forget what they really are: revolving credit accounts that obligate your future earnings for the sake of immediate gratification. This doesn’t mean that credit cards are horrible and everyone should stay away from them, but it does mean that there is a real potential there for things to get out of control.
Look for these signs that should tell you in no uncertain terms that it’s time to chop up your credit cards and never look back. Do any of these sound familiar?
1. You usually only pay the minimum payment required.
It’s one thing to make minimum payments one month to have extra money for an out-of-the-ordinary expense (your car breaks down, but it’s another thing entirely to always make the minimum payment on your credit cards. Face it; with compound interest you’ll probably never get those things paid off.
2. You have a hard time meeting you minimum monthly payment.
As your credit balance creeps up, so will your minimum monthly payment. The truth is, though, that the minimum monthly payment is usually such a small amount that it pales in comparison to what you actually owe. If paying the minimum has become a stretch, then that’s a problem.
3. You buy expensive things impulsively with your cards quite often.
If your closet is jam-packed with designer clothes or your car is tricked out like mad -and this is all courtesy of your credit cards – then chances are you have some serious debt. You either need to cut up your cards or get over the delusional sense of self-entitlement that tells you that you “deserve” to live above your means.
4. Your cards are all maxed out.
Have you reached the point where you can’t use your credit cards anymore because you’ve reached the maximum balance? There is something really depressing about making payments each month on a card that you can’t even use anymore because you owe so much. Don’t ask for a credit line increase…cut up the card and pay it off.
5. You’re afraid to open your credit card statements.
Some people have automatic payments set up to pay their credit cards each month, but this should not be used as an excuse to not open your statements when they arrive. Maybe seeing your balance in print will actually compel you to cut up your cards.
6. The amount of money you owe actually makes your stomach hurt.
When you think about the amount of money you owe on your credit cards, do you actually get a sinking feeling in the pit of your stomach? Getting a physiological reaction to your credit card balances is a sure-fire sign that it’s time to cut them up for good.
7. You start paying for everything with credit because you have to.
It may seem like a weird idea, but if you find that you rely on your credit cards too much then the best way to end the cycle is to cut up your credit cards. “How will I eat?” you ask, “How will I put gas in the car?” The point is to find ways to pay cash or use a debit card for this stuff, and if you don’t force yourself to then it may never happen.
8. Your credit applications get denied because you already have so much credit.
Potential creditors like to see that you can handle credit card debt, and making payments on time to all your accounts helps your score a lot. There comes a point, however, when potential creditors take a look at the long list of accounts you already have open and decide that you’re too big a credit risk. Translation: They figure you’re heading straight to Bankruptcyville.
9. Bankruptcy starts to sound pretty attractive.
If the thought of declaring bankruptcy starts to sound really appealing to you, it’s time to cut up those cards. You should also know that although bankruptcy is an option for some people, it’s a long, drawn-out option that is probably a lot harder to deal with than you realize.
10. You get the distinct feeling like it’s time for a big financial change.
Sometimes the very best indicator that it’s time to cut up the credit cards for good is nothing more than a nagging feeling that you have. Some people just reach a point in their lives when they decide that enough is enough, and they would rather just be free from the whole credit mess. When this feeling hits, act on it.
Ignoring these signs and going along merrily with your credit cards can be a recipe for financial disaster. Sometimes the best thing to do is to chop your cards up, close the accounts, and pay the balances off.