To Cut or Not to Cut? The Battle with Credit Cards

Getting spending under control is a popular resolution for many Americans. A few of us struggle with spending the frivolous dollar here or there, but many struggle on a daily basis with being able to pay down high bills from creditors. Credit card spending is out of control in this country, and the average household has nearly $16,000 in credit card debt. For those of you with kids, that could be a substantial dent in future college tuition.

To better deal with their debt, many houses are wondering if they should give up credit cards altogether. While this may seem like a great idea when trying to control spending, cutting up those cards isn’t always the best option. In fact, there are a couple of better ways to deal with those credit cards that will allow you to build or maintain your credit while also keeping your spending under control:

Pay Off that Balance

Never charge more to a credit card than what you can afford to pay off each month – that should be your mantra whenever you reach for a card. Being able to pay off your credit card each month will allow you to keep from paying high interest rates while also allowing you to keep your credit score high.

Watch Which Cards You Use

Contrary to popular belief, not all credit cards are created equal. Some offer great rates and fees initially only to hit holders with higher rates and additional fees 6 months later, while others don’t offer money saving perks and rewards that can make using your card more beneficial.

So when you go to use a credit cards make sure that you use one of the numerous cash rewards credit card, or when traveling, a no foreign transaction fee credit card to avoid high fees. You also want to make sure to use the cards that you have had the longest. By keeping your longest running card active, you will be able to keep your credit score positive.

Re-Evaluate Your Spending

While you may need to charge a family dinner once a month or a tank of gas to keep your card in use, you want to avoid using your credit cards for shopping sprees and other frivolous spending practices. By using your credit card to make purchases that aren’t necessarily necessary, you risk racking up higher bills and doing so without feeling the financial retributions – allowing you to repeat the behavior over and over. So before you swipe, ask yourself, “Is this necessary?”

With the new year comes a fresh start. Start your new year off right by getting your finances back in order, and getting those credit cards paid off and keeping those balances low. Controlling your spending doesn’t mean you have to cut your cards, it simply means learning when to cut yourself off from spending.