When trying to break a bad habit, it’s usually easier to abstain from something than to just do it sometimes. We all have different personalities and tendencies, yet this is true almost across the board.

When I was pregnant with my second baby, I had gestational diabetes, so I decided to cut out all the added sugar from my diet until she was born.

Although I definitely have a sweet tooth, this was surprisingly easy to maintain. There was no choice to make whenever there were sweets around because I already decided, and the answer was always no sugar.

At other times, when I’ve tried to moderate, “just a little” tends to increase to a little every day, and then more and more. You’ve tried this moderation method too, haven’t you?

It’s easier to say never than just a little. And you can use this same strategy of abstinence to ditch credit cards for good.

But should you?

We’ll unpack three different financial situations and whether you should cut out credit cards entirely or if you might be able to use them responsibly. These include:

  1. When You’re In Credit Card Debt
  2. When You’re Trying to Get Out of Debt
  3. When You Have No Consumer Debt

In some seasons, it’s necessary to cut up the cards, but in others, it could make sense to keep using them.

1. Should You Use Credit Cards When You’re Trying to Pay Off Credit Card Debt?

One of my Budget Breakthrough students recently emailed me. She had a goal of ditch credit cards for good, but she wasn’t quite sure if that was even a good idea. After all, what about the points? And her credit score?

My response to her was that she was absolutely right in wanting to stay away from credit cards because she and her husband were in credit card debt. I recommended that they should avoid plastic altogether.

The problem here was that until they began Budget Breakthrough, they were in the habit of relying on credit cards just to cashflow their basic needs. The best way to break the pattern was to quit cold turkey.

They were committed to budgeting and paying off debt, but continuing to use credit cards for their regular spending would make it way too easy to slip back into their old default mode.

Just as with sweets, for most of us, it’s easier for most of us to be successful if we just say ‘no’ to using credit cards all together.

When you’re in credit card debt, don’t use your credit cards at all.

Switch to cash or debit instead. This keeps the pressure on to spend only as much as you earn. If credit cards are not an option, then you’ll be forced to get creative and find other ways to meet your needs. As long as CCs are there, the trip to Disney, Ikea, or even through the drive-through are just too tempting.

Sadly, I’ve seen it again and again when families skip this step and try to use credit cards “for the points.” In fact, this is one of the biggest things that holds people back from paying off their debt.

2. Should You Use Credit Cards When You Have Other Consumer Debt?

My husband and I have not carried any revolving credit card debt since we’ve been married. When we were trying to become debt free, it was student loans we were fighting against.

Like us, you might not have any credit card debt, although you’re still trying to pay off a car or student loans. If this is the case for you, then you may consider using your credit cards for either convenience or cash back points.

I know this differs from the approach some other well-known financial gurus take. However, I have to be honest here and say that even when we were paying off our debt, we never stopped using our credit cards. In fact, we paid for everything we could with plastic and paid them off frequently. The reason, as you might have guessed, is that we were trying to get the points.

Every month, I would convert our credit card points into cash and make an extra payment of $40 or $50 on our student loans. So, strange as it may seem, using credit cards was one of the techniques we used to pay off debt faster.

Still, you might be wondering, what about the risk of fees and interest?

Please know, I’m by no means advocating the use of credit cards for everyone. You need to know your situation and know that you and your husband are 100 percent committed to sticking to your budget and paying off debt no matter what. If you have even a twinge of hesitation that you’ll be able to use cards responsibly, then you should definitely cut them up immediately.

3. Should You Use Credit Cards When You’re Debt Free?

Once you’re debt-free, except perhaps your mortgage, you have proved that you can probably trust yourself with credit cards, but always be on your guard against potential interest, late fees, and annual fees. Also, consider studies have shown that people spend more when using credit cards as opposed to cash. For some families, the risk is not worth it.

Since we became debt free and no longer needed the cash back to pay off debt, credit card points have afforded us some memorable trips together as a family. A couple years ago, we paid for a week stay at a cabin on a lake using credit card points. Our family has also made cross country plane trips using airline miles that cost just a few dollars in booking fees — including a last-minute trip due to unexpected health issues.

After you’re debt free, you may consider using credit cards for the cash-back points. We’ve used them to enjoy low-cost family vacations together.

If you’re in credit card debt, you might still be asking, what about points and miles?

You wonder, “Couldn’t I use those to pay off debt more quickly?” However, let me ask you this. Has trying to pay off debt while using the cards worked for you in the past? My guess is that it hasn’t, or you wouldn’t be reading this. The risk is just too great. If you have carried any credit card debt, ditch the cards for good.

But don’t you need a credit card to rent a car?

You can, in fact, rent a car with a debit card. However, the rental company will want to make sure they’re covered in case of damage to the car.

As such, they may require you to provide additional forms of identification, to purchase their insurance, or to allow them to check your credit score. In addition, they may put a hold on your account, so they can charge you if something were to happen. The extra hurdles will be worth it if avoiding credit cards helps you dig your way out of debt.

Can I still get a mortgage with a good interest rate if I don’t use credit cards at all?

Many families who choose to avoid credit cards are still able to get a mortgage at a reasonable rate. Simple living author, Tsh Oxenreider and her husband Kyle were debt free for three years before trying to buy a house. They don’t use credit cards at all, so they certainly weren’t nurturing their credit score even though they are financially responsible. However, they were able to use a manually-underwritten mortgage through Wells Fargo to make it happen.

The process did take longer than average. They had to jump through more hoops than with a typical mortgage, including:

  • Filling out more Paperwork
  • Responding to follow up questions
  • Submitting several years worth of bank statements (Rather than the usual 2 or 3)
  • Recording phone interviews with companies they regularly make payments to (Like utility companies and past landlords)
  • Putting down a bigger than usual down payment

In the end, they put 25% down on a 15-year mortgage and got a 3 percent interest rate and considered the alternative process well worth it. For Tsh and her family, the potential risks of using credit cards do not outweigh the benefits.

Sometimes, even families who believe they are living debt free fall into debt due to using credit cards for convenience or points.

I have worked with several moms who joined Budget Breakthrough, believing they were already debt free. However, as they worked through the lessons, they soon discovered that they were, in fact, using this month’s income to pay off last month’s credit card bill. This is debt, plain and simple. Sadly, financially responsible families fall into this debacle all the time.

If you choose to use credit cards, follow these rules to minimize risks:

  1. To head off this situation, learn to budget correctly and to plan your cash flow closely.
  2. Set up an automatic payment at least once per week. The goal should be to always have a zero balance. I’ve known other families who pay off their card every single time they make a purchase. That would also be a great option. In either case, this will help you make sure you never get caught in the cycle of paying last months credit card bill with this month’s income. It will also help you avoid ever paying a late fee or interest.
  3. For cards with annual fees, set a reminder and call to cancel the card or negotiate your way out of the cost about a month before you will be charged.
  4. Card companies can be surprisingly accommodating if you take the time to pick up the phone, especially if you have a good credit score and payment history. If you do incur any kind of fee, ask for it to be removed. Make sure you never pay any type of credit card fee (late, annual, or interest). If you find yourself in this situation, close the card and start using cash or debit immediately.
Letting go of the convenience of credit cards could make way for something even more amazing: financial freedom.

Here’s the gist.

If you’ve ever carried a balance on your cards, it’s time to ditch them for good. Say adios and cut them up. They’re nothing but dead weight, and they will hold you back from enjoying financial freedom.

However, if you have other consumer debt like student loans, you could use a card that offers cash back to pay off debt faster. For those of you who are already debt free, points might allow you to enjoy some fun vacations together as a family.

If you decide to use credit cards, you must know yourself and honestly assess whether you and your spouse can handle the risks responsibly. You should also put safeguards in place to avoid interest and fees.

When I had needed to manage my blood sugar, I completely gave up something I liked for something way better: a healthy home birth and baby. When you ditch the credit cards for good, you let go of convenience in lieu of something amazing: financial freedom. As with eating less sugar, it’s often easier to cut it out completely than it is to have just a little. The same is true when it comes to credit cards, so cash or a debit card should remain the default decision for most of us.

Now it’s time to decide.

Assess which of the three scenarios fits your financial situation. If you need to, talk with your spouse and put those cards under lock and key today. For others who are confident in using credit cards carefully, put the necessary safeguards in place to avoid getting sucked into debt unexpectedly or paying unnecessary fees.

If you’re struggling to pay off debt or you’re stuck in the cycle of paying last month’s debts with this month’s income, you might want to take a look at the Budget Breakthrough program. Inside, I walk moms through how to budget successfully, so they can pay off debt and save for the future. The waiting list is now open for the next session.

Free Course: 6 Budget Myths that Keep You Stuck
Send Me Lesson #1
Free Budgeting Course