Credit Cards: Why You Shouldn’t Use Yours

By: Michael Millington

When you have past due accounts, it can be hard to deal with the situations debt may force you into. Falling behind on bills, maxing out credit cards and more can have serious impacts on your daily way of life. You might consider giving up the use of cards altogether to get rid of the debt you have once you settle it. This course of action, however, can negatively impact your credit, resulting in further financial hardship down the line. A more financially sound approach might involve keeping a card active but unused. However, what should you consider if you plan on holding onto an unused credit card?

 

Not Using Credit Cards

Keeping a credit card in your possession that is not utilized can be a benefit for your credit score overall. Most people look to close out certain credit cards when they feel like they can’t keep up with their credit card debt. Closing out a credit card has an impact on a metric that impacts your overall credit score: credit age. If you close out a card, your overall credit age might be negatively impacted and your score might be lowered because of it.

There is a potential upside to keeping a card open but unused. The main upside can be the continued reporting of the credit line (and its age) to the credit bureaus. It takes a long time to build something like credit age. There is nothing special that you can do to speed up the process. You simply have to keep your oldest lines of credit open. If you do open newer lines of credit, the average age of your multiple credit lines will create your new credit age.

The problem that many cardholders have is the temptation to use a credit card and grow their credit debt again. This is how many people get into the habit of destroying their credit card. Without the ability to use a credit card in the world, a much more responsible outlook when handling your credit can become possible. The line of credit will still exist, but you won’t be able to swipe for purchases. This can keep your credit age constant without putting you at immediate risk of increasing your credit debt.

 

Limiting Your Credit Applications

If you are dealing with credit card debt, then the last thing you may be thinking about is applying for newer lines of credit. However, there are a select few who may try to apply for multiple lines of credit in a short period of time. This can be detrimental to your credit score in its own right, but it also might not be productive while trying to eliminate your credit debt.

Limiting your credit applications can help limit the amount of credit lines you have. The less lines of credit you have to manage while you deal with financial hardship, the less possibility you may have to make the situation worse. As mentioned before, making multiple hard inquiries of this sort can lower your credit score. Coupling the nonuse of your credit card with a lack of applications for new lines of credit can help you turn your debt situation around.

 

Making the Switch from Credit Cards to Cash

One way to help avoid using your credit cards is to make a strong transition towards using cash. Putting more of the financial burden on your disposable income might help to reduce your credit usage and potentially subtract a credit bill every month. Remember that if you use your credit card less, you will have less to pay back to creditors. This should be the ultimate goal in the pursuit of debt elimination.

In order to make the leap to an all-cash plan, a strong budget must be created to accommodate the change. Since income is not borrowed but earned, you may feel a stronger sense to hold on to your money. This can work to your advantage when reworking (or creating) your budget. This may cause you to reevaluate certain expenses you have every month. Eliminating unnecessary purchases, bills and other monthly obligations can go a long way in establishing a more culpable method of spending your money.

Aside from being easier to budget, using your cash has little to no impact on your credit. Replacing your cash is a simple matter of waiting to get paid again. If you use a debit card to make credit-like purchases, you may have several options with your bank to make sure you are always aware of how much money you have to your name. Options like notifications and ATM withdrawal limits can help keep your money consumption manageable and within the budget you dictate.

 

Being buried in credit card debt can be an overwhelming situation to handle on your own. Even the thought of giving up the use of one (or all) of your credit cards might be too much for the average American to handle. That’s where Guardian Debt Relief comes in. We can help you reach debt freedom in as little as 24 months with a debt settlement program that can work towards making debt elimination a reality. Contact us for a free consultation and have our debt specialists show you the best options for your specific debt situation. Take the first step and contact Guardian Debt Relief today.