Is It Time To Cut Up Your Credit Cards?

2019-04-26   minute read

Linda Paul

Lifestyle Debt

For some people, quitting credit cards cold turkey is more than just great alliteration. It’s entirely possible and potentially the best solution to their ongoing debt struggles. They can stop using credit cards without resistance and quickly adapt to living on cash by following a detailed spending and saving plan. 

For others, cutting up credit cards might feel like severing a limb. They may have become unconsciously reliant on credit for everyday purchases like groceries and gas. However, the best intentions to pay off that debt with regular income may fall by the wayside as their income falls short and credit card balances amass faster than expected.

Person online shopping on their laptop holding a credit card

Then there are those who only have one or two credit cards and do an effective job of monitoring their spending and keeping it under control. Their balances may be comfortably under the limit, but they still wish to manage credit better and perhaps have a goal of paying off their credit cards completely. 

Which of these credit card users do you relate to most?

Four Steps to a Better Relationship with Credit

When whipping out a credit card has become an automatic financial behaviour – one your income may or may not support – change will take time. 

Before you start snipping those plastic habits in half, consider the following four steps when it comes to your credit card spending: analyze, monetize, prioritize and stabilize. These can help you become more consistent and successful whether you quit credit cards cold turkey, reduce your use of credit cards or erase credit card debt from your life for good.


The first thing you’ll want to do is create a list of all the items you have been charging to your credit cards. This will help you drive to the heart of how you use credit and offer clues for how to reduce or eliminate problem behaviours.

For instance, do you use your credit card to grab a coffee on the way to work? Do you pay for regular maintenance on vehicles? Dinners out? Your children’s sports fees and events? Are you supplementing your income with credit by using it for groceries, gas or bills? 

Now that you have your list, it’s time to figure out how to plan and pay for these expenses with cash going forward.


Next, expand your list by adding a dollar amount next to each item. Grab your credit card statements and go through your charges one by one. 

It’s normal to feel some resistance. Seeing your spending in black and white is often anxiety inducing. On the other hand, knowing the truth about your spending can also open your eyes to better spending and savings opportunities.

One more thing: Be sure to add interest charges to the bottom of your list. This is the (often significant) cost and consequence of using credit cards and not paying the balance in full every month. The next step requires understanding the total cost of your credit card usage – your spending plus the credit cards company’s take. 


Now that you know how much you’re spending on credit cards – including interest charges – you need to determine whether that would fit into your monthly budget or spending plan. In other words, can you afford to pay cash for those purchases?

You may discover you can afford to set money aside in your budget to pay for these purchases without jeopardizing your fixed monthly expenses or putting anything on your credit cards. And that’s great! You now have a plan to get rid of your credit cards – and you may now feel suitably comfortable to cut up your credit cards.

Alternatively, you may be happy to realize you can eliminate many of the expenses in your list, thereby freeing up cash flow in your budget and / or reducing your credit card use. You can use these newly discovered funds to pay the balances down and potentially increase your savings.

However, you may also learn more of your hard-earned money will be going out the door than coming in. If that’s the case, now’s the time to prioritize.

Re-examine the list you made of all your credit card spending. Which purchases are vital to your day to day life? Which ones are unnecessary expenditures? 

If you have little or no room to spend from your monthly cash budget, you simply can’t afford to put any excess purchases on a credit card. How will you pay the credit card charges, plus interest, when you don’t have any extra money in your budget? 

In addition to cutting up your credit cards, you may need to implement additional debt reduction strategies to solve the problem.

Stabilize: Life-Changing Debt Solutions

Unmanageable debt is stressful. It can strain relationships and negatively affect your mental and physical health. If you are in a situation where your finances are causing you or a family member stress, it’s time to stabilize your debt and consider options to eliminate it for good.

MNP offers a Free Confidential Consultation and several Life-Changing Debt Solutions to help you find the right path toward a financial fresh start. A Licensed Insolvency Trustee will meet with you to review your finances, understand your challenges and identify your options.

You may qualify for Bankruptcy or a Consumer Proposal which could help you become debt free within anywhere from nine months to five years from your initial filing. Or you may benefit from another alternative. No matter your situation, your Licensed Insolvency Trustee will help you make the best choice for you to defeat your debt, reach your goals and get back to life.

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