If you are starting your new year with more debt than you anticipated, it might be a good time to consider avoiding credit card use for a while. Unfortunately, it’s the convenience of these products that make them so ripe for overspending, and some cardholders will be best served by switching to cash, debit cards, or other methods of payment until their debt is retired, or at least under control.
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During this time, credit card users can implement a sound plan to pay off their debts as soon as possible, while making any necessary new purchases with their available funds, not a line of credit. You can use this calculator to figure out how long it will take you to pay off your credit card debt.
Here are six different strategies that you can use to put your credit cards on pause while you regain control of your finances.
1. Leave Your Cards at Home
Not carrying your credit cards in your wallet or purse makes it far more difficult to use them, and to overspend. The primary problem with this strategy is that your cards will not be available to you in case of an emergency, such as a travel disruption or an unexpected car repair. In addition, you will still be able to make purchases from home where you have access to your cards or online on any site where you’ve opted to save your data.
2. “Sock-Drawering” or Otherwise Hiding Your Cards
Beyond simply leaving your credit cards at home, some people go to additional lengths to hide their credit cards from themselves or other members of their household. Certainly, it can be easy to lose anything in a sock drawer, so putting them in a safe would be much more secure.
3. Giving Your Cards to a “Cardmaster”
Just as some parties have a designated keymaster to withhold car keys from intoxicated guests, you could consider entrusting your plastic to a friend or family member who can keep them from you until you both agree that it is the right time for you to use them again. Of course, account holders looking to get around the Cardmaster are always free to report their cards lost and have replacement cards issued… so if you’re that desperate to use your cards, this option may not be for you.
4. Putting Your Credit Cards on Ice
Another creative technique that some use is to freeze their cards in a block of ice. So while the cards may not be hidden, it takes significant time or effort to thaw out the cards in order to use them. Presumably, cardholders can use this time to reconsider their actions before using their credit cards again.
5. Cutting the Cards in Half
Beyond icing your cards, you could cut them in half or otherwise dispose of them securely. Doing so retains access to your account, but now you would have to contact the card issuer and request that the card be replaced before it can be used. While it only takes a few seconds to make this request, it can take several days to receive your replacement card, giving you even more time to reconsider using credit cards as a method of payment.
6. Closing Your Accounts
The ultimate step that you can take to pause your credit card use is to close your credit card accounts. When you do so, any remaining balance will still exist and must be paid off under the same terms in effect when the account was closed. One of the disadvantages of this strategy is that it can actually hurt your credit score. When credit card accounts are closed, then cardholders are reducing their available credit and increasing their debt-to-credit ratio, which is a major factor in consumer credit scoring formulas.
As you pay down your credit card debt, it should have a positive effect on your credit score, which benefits you in many ways, including helping you qualify for better rates and improving the cost of debt for you over time. You can get a credit report summary every month on Credit.com to see where you stand and help you map out where you need to be.
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Jason Steele has worked as a computer systems administrator, a commercial pilot, and a contributor to several of the top personal finance sites as an expert on credit cards and travel. He is a graduate of the University of Delaware with a degree in History. More by Jason Steele