Cutting up your credit cards?

Have you been shunning credit cards and paying with cash or debit cards these days? Why?

About 8 million Americans stopped using credit cards during the past year, AJC reporter Katie Leslie writes.

Experts say the decline has two sources — consumers whose cards were revoked due to unpaid debts and those who cut up their cards themselves during the recession, Leslie reports.

Which one are you?

73 comments Add your comment

Mary

December 7th, 2010
9:21 am

I haven’t had or used a credit card in well over 20 years. I am on a cash only basis and I love living debt free (other than the mortgage and monthly household bills)….If I don’t have the cash, I won’t get the item.

I sleep very well at night, and I’m not hounded by collectors. I live well within my means. I’m a single parent, and have bought two houses on my income. I drive a 12 year old car and live very frugally. I have a garden and grow my own veggies and herbs. I can soups and sauces, and my freezer is loaded with plenty of food.

I even managed to put a good bit of money away for my child’s college fund. She is now in her second year of college. And no her father didn’t help one bit. I did this all by myself. Yes I sacrificed a lot over the years, but look where I am now. Financially Comfortable!

Piggy Bank

December 7th, 2010
9:29 am

Not using them. CC’s are the worst thing available to young and old alike. Once they get you where you can’t pay the thing off on a monthly basis or miss a payment date the loan shark provision kicks in. I cut all of them up years ago and will neveer use them again and have told my kids to never, ever get one.

John

December 7th, 2010
9:34 am

Saving is a higher priority for me right now. I have paid off almost all of my CCs and plan to never use one again. They are really a rip-off in the end.

GeorgiaBorn

December 7th, 2010
9:35 am

My wife and I use credit cards for EVERYTHING. We pay off the balances each month and we earn reward points on all of our cards. Once a year we cash in the points for gift cards from Home Depot. Last month we cashed in and got $1400 in Home Depot gift cards. If you can’t pay off what you spend each month on the cards, then they are probably not a good idea for you. But if you can afford what you buy with them, pay off the balance each month, and get reward points then they are a great idea.

Joel Edge

December 7th, 2010
9:35 am

I have only one and use it very sparingly. Always have.

Jonathan

December 7th, 2010
9:35 am

We only use credit cards. We have never carried a balance, and we only buy what we can afford. We even refused debit cards opting for the ATM only version. Why? Because of fraud. American Express and Discover provide not only huge cash back bonus (free money) but also provide secure online account numbers for online purchases (discover), and both Amex and Discover have no questions asked, “We’ll take care of it immediately” removal of fraudulent purchases. A debit card you are out of that money for a possible very long time depending on the bank, you are also on the hook for a lot larger amount in liability, where a CC is $50 max no matter the size of the fraud.

CCs also help your credit score which helps on House and Car loans. With self control there is zero reason NOT to use Credit Cards over other purchase methods.

Not Impressed

December 7th, 2010
9:36 am

Hey Mary, the whole I-did-it-on-my-own-with-no-help-from-my-baby’s-daddy line is trite. With so many people making that claim it no longer means anything. It’s like a kid saying they graduated high school, when high schools are graduating anyone and everyone even if they can’t read, it no longer means very much to just have a high school diploma. But good for you, I can see you need the praise.

Ayana

December 7th, 2010
9:36 am

I started listening to Dave Ramsey and those were the first to go. Thanks Dave! On the way to financial freedom

Who Cares?

December 7th, 2010
9:38 am

I figured out years ago that banks don’t care about you or your finances. They’re greedy and are only looking out for their bottom lines. Preditory lenders have nothing on credit card issuers, as both use deceptive methods of taking your money. Yes, it’s the small print, but none the less, it’s the way they do business. Another example of political corruption with the banks. These practices have long been legal, even though they are unethical. Politicians only acted on banking rules when the heat came from the public.

So, I don’t use my personal credit cards anymore. One I cut up so I’ll never have the opportunity to even use it again. I’m paying on it and will eventually knock it out. The others are paid off and will remain that way. I do use a business credit card to finance my small business needs and help build credit in my business’ name. So far, I have been able to pay it off each month, and that’s the way I want to keep it! Remember, you have NO friends when it comes to strangers helping you with your money and finances! Especially if you’re dealing with corporations!!!

Hank

December 7th, 2010
9:38 am

I woke up one day in the late 1980’s sunk with 30-K of self inflicted credit card debt with nothing to show for it except a good time. Guess what? I paid it all back over a 5 year period. I did not solicit a credit counselor for any debt or rate reduction, nor did I file for bankruptcy. Life lesson learned.

I still use a Discover card for any purchase that takes the card without a surcharge.For example, utilities, grocery purchases, etc. At the end of the year the cash reward comes in handy. However, my balance is always paid off in less than 30 days.

Never again will I shackle myself to that type of debt.

Lamar

December 7th, 2010
9:40 am

I don’t got me no credit cards. Whenever I need something I take whatever I want to. I am not going to get into debt like some sucka.

KA

December 7th, 2010
9:41 am

Mary has the right idea about living frugally. I use a credit card for monthly expenses, but pay it off at the end of the month. It’s simply a convenience for me. When we built our small home in ‘84 we got a 15 yr mortgage that was paid off when our first child went to college, and that monthly payment was then converted to help pay for college for our 3 kids (who also kept their HOPE scholarships and worked summers for extra college money). We buy used cars and drive them until the wheels fall off; mine is 15 years old now. We save up for vacations, furniture, appliances, etc., and pay up front. Pay as you go, no debt. I wish that Congress would do the same.

TinaC

December 7th, 2010
9:42 am

We use a card about once a month. We use it for things like oil changes and occasionally eating out (about twice a month). All of our other cards are locked away and are having their balances paid down. Eventually we will have a nice and tidy stack of “emergancy” cards incase something horrible happens like our house is hit by a tornado!

TnGelding

December 7th, 2010
9:43 am

Jonathan

December 7th, 2010
9:35 am

Very sound reasoning. Why cut them up when they pay you to use them? I just ordered $250 in gift cards to use for Christmas.

Jonathan

December 7th, 2010
9:44 am

Piggy Bank, The advice to your kids to never get a credit card will ultimately hurt them very much. Without a credit card they will not have a credit score, or if they do have one it will be very poor. This will prevent them in most cases from being able to get an apartment. Also in today’s housing market with poor scores they will either not be able to get a home mortgage or they will be stuck paying twice the interest rate that someone with a good score has. That goes double for car loans. There is a reason at the end of car commercials they say “For well qualified buyers” . No score = NOT well qualified.

Deborah

December 7th, 2010
9:46 am

Haven’t had a credit card for over 3 years. We are debt free thanks to Dave Ramsey! Woohoo! Why be slave to the lender? My goal is to get a “0″ credit score!

shadow7071

December 7th, 2010
9:48 am

The Great Depression changed people’s behaviors about banks, debt, and managing their money. This report is an indicator that the Great Recession is changing peoples behavior about credit cards and consumer debt. This is good news for those who are promoting personal responsibility but bad news for the banks, retailers and the credit gathering and reporting businesses.

I seldom use a CC.

Jenny

December 7th, 2010
9:49 am

I use credit cards for everything. However, I use the ones with the best rewards and budget myself and track my spending so that I can pay them off in full each month. Then I get free cash from the credit card companies although I’ve never paid them a dime in interest.

GeorgiaBorn

December 7th, 2010
9:53 am

Okay, here’s what I don’t understand. A lot of you are claiming that you don’t use credit cards anymore for anything. But you have to pay for gas, groceries, entertainment, etc. with something, right? Unless it’s a self control thing, why not use a credit card and then pay the balance off at the end of the month? Like a previous poster said (as well as me in an earlier post), the credit card companies PAY you to use their cards. If you pay the balance off at the end of the month, it doesn’t cost you anything extra to use it. I don’t get it. I also mentioned that my wife and I just cashed in $1400 of Home Depot gift cards a few weeks ago, courtesy of Capital One and American Express. We do not carry a balance on any of these cards and they bend over backwards on their reward programs. We just use them for things that a lot of you are paying cash for. Why not use a card that pays you???

TnGelding

December 7th, 2010
9:53 am

With the new finance regulations how much longer can they continue to dole out the freebies?

Rickster

December 7th, 2010
9:54 am

We’ve paid off three of five cards. Number 4 will paid off this month. Number 5 (hopefully) early next year.

When you’re not sending hundreds of dollars to credit card companies, it’s amazing what else you can do!

CE

December 7th, 2010
9:55 am

I put one tank of gas on my AnEx each month and pay it off when I get home.
I have a Visa as well and I usually put one dinner on it a month and pay it off when I get home.

Rickster

December 7th, 2010
9:57 am

GeorgiaBorn, studies show that when you pay with cash, rather than credit cards, you actually spend less – even if you pay the balances off each month.

Also, how much do you pay the companies in annual fees to use their card?

Jonathan

December 7th, 2010
9:58 am

Rickster – No Annual fees. All the cards are free.

N2lectual

December 7th, 2010
10:07 am

GeorgiaBorn, most people are too dense to understand that concept. In the meantime, I’ll keep collecting reward points and taking free vacations courtesy of American Express…all while remaining debt-free

GeorgiaBorn

December 7th, 2010
10:11 am

Rickster, the only card that my wife and I have that charges us an annual fee is one American Express card. That fee is $39 per year. We keep that card because that’s what Costco accepts and it has a pretty darn good reward program albeit not as good as Capital One.

I tend to agree with you about spending less when you are paying with cash. It’s apparently a self control thing for those that don’t want to use credit cards. I completely understand that. I guess what I am saying is that if people can get a handle on those “impulse credit card” purchases and only use the cards for what they are currently using cash for, then you will reap the rewards that you don’t get when you don’t use the cards.

iRun

December 7th, 2010
10:16 am

Well, first of all, people who lost their CC “privileges” are unlikely to post here about it. Also, people who aren’t very responsible with their spending, or find themselves desperately using their CC to pay for necessities due to loss of income will not post here about it.

That being said, some years ago when my husband and I were a 1.5 income family because he was in school, we ended up using the CC to pay for home repairs. That balance just sort of sat around for a while and every now and then we’d make a small dent in it. But that dent would get flattened out by monthly interest fees. After we became 2 income we had become sort of complacent about it because the debt didn’t grow…but it also didn’t shrink. Earlier this year we decided enough was enough. We made a family budget and decided we could sink about $1000 a month on it and still put about $1500 into our monthly savings (that’s where we now pull any home repairs, car repairs, or vacation expenses). As a result, by the end of 2010 we will be CC-debt free and we will start putting that $1000 into savings for a total monthly savings of $2500.

Now, to do this meant a little tightening of the budget belt, but come on! I mean, if we can cut spending a little here and there and have $2500 available for savings and debt reduction, which is more than most people have TOTAL for their monthly budget, then we have NO EXCUSE and we are both sort of beating ourselves up for not acting sooner. Pure complacency. And I guarantee you that CC companies DEPEND on that kind of human flaw to keep them in business.

One last thing…it also showed us that when we were on 1.5 income we really had no excuse for using the CC for home repairs. Even back then we were throwing some money into a savings account. We should have raided THAT for home repairs and paid ourselves back, rather than use the CC. I mean, over the years I can’t imagine how much in interest we paid them. I don’t even want to think about it makes me so mad.

Anyway, if you make a decent living there is no reason for using CCs (huge medical emergencies excluded). There’s always a way to tighten the belt!

However, I don’t say that as a judgement. Sometimes it’s a matter of not only complacency but just not knowing quite how to go about it.

wondering

December 7th, 2010
10:18 am

put all I can on the card. BUT, I pay off the entire balance every month and sinceI use a cash back card with no annual fee, the card company actually pays me to use their card. I pay no interest, I pay no fee, and I get checks from the card company.

iRun

December 7th, 2010
10:24 am

While I find the rewards system of some cards to be attractive, once we get out of this CC debt I don’t want to have anything to do with a CC for a while. I need distance and “closure” like getting out of an abusive relationship. ;)

But maybe after a while I’ll look into those. Once I am confident in myself as a debt-free person.

Mary

December 7th, 2010
10:25 am

@not Impressed – you may NOT be impressed, but you sure are bitter. I don’t have a “baby daddy” my child has a father.

Merry Christmas!

Kar

December 7th, 2010
10:26 am

THERE IS NOTHING INTRINSICALLY WRONG WITH USING CREDIT CARDS.

They can be great financial tools if you’re in a true emergency, don’t have cash, are useful id and allow the consumer to potentially use a month’s float for their expenses. They can also build your credit history for when you need to draw on debt for large purchases such as cars or mortgages.

The trick though is to BE DISCIPLINED. Pay off the balances within a month to avoid interest charges and avoid cards that charge a base fee.

Personally, I find it easier to budget and track expenses with a card due to an audit trail. Paper bills have a tendency of melting away without a trace but it’s a personal preference.

Again, IF YOU’RE DISCIPLINED there’s no reason to fear cards or rack up personal debt. You’re using the credit card’s money with no consequences.

Max M

December 7th, 2010
10:33 am

My credit cards are all maxed out anyway—no need to cut them up. I’ll be paying on these things for years for all the useless stuff I bought in the good times.

Mr Frugal

December 7th, 2010
10:34 am

I have two credit cards…A Visa and a MasterCard. I still use them. But I have always paid them off every month and have never carried a balance. Having a credit card does not automatically mean you are carrying credit card debt. Both cards are cash back cards and I get a handsome check two or three times a year from each.

JJ

December 7th, 2010
10:40 am

No credit cards here. Haven’t had them in years. I ran up so much debt back in my 20’s. It took me 5 years to pay them off and I haven’t gone back!!!!

If you live within your means, you don’t need credit cards. Priorities.

Richard

December 7th, 2010
10:40 am

I lost my CC’s last year. I am in debt and for now – no way out. Laid off in 2008, out of work through 2009. Barely able to pay living expenses and eat. No health insurance for me, wife and kids. However the illegal immigrant down the street gets free health care, the refugee immigrant gets free housing, food, higher education, and health care. I was born here have a college degree in IT am very marketable yet no one is paying the salary I used to earn before layoff. Welcome to America 2010.

Bright Idea

December 7th, 2010
10:44 am

Mary, keep up the good work and forget about Not Impressed. Clearly she is envious of you.

ps We use credit cards for EVERYTHING but only buy what we can afford. Like others have said, the end-of-the-year rebates are fantastic.

Hannah

December 7th, 2010
10:44 am

I put two weeks worth of pay into my credit card, which was maxed when I was between jobs, and it only covers about 1/4 of it. Within a week or two, it’s maxed out again, and doesn’t get used for another two weeks.

Al

December 7th, 2010
11:05 am

Use them exclusively to reap the various cash back and gift card benefits. But pay them off in full every month. No debt, mortgage, car payments or otherwise is the only way to go. It took years to get here but it’s a great feeling indeed.

Kneel Borezt

December 7th, 2010
11:17 am

I’ve defaulted on a bunch of them and never paid a dime. Collection agencies? What a joke! These bottom-feeders have no teeth. Once in a blue moon I actually talk to the cretins. And, BTW, I have a pocket of plastic. Some are paid off. some aren’t. No sweat. And, when you buy plane tix with Amex, you get to use the VIP lounges at airports. EWR and LGA have pretty sweet ones.

JB

December 7th, 2010
11:18 am

I use one card, American Express, and pay it off monthly and have done so for at least 10 years. I ruined my credit as a young adult and decided when I got it back I would never let it happen again. It is a long steep road to recovery once you mess it up.

If there were only a few things I could impart to my children, not using credit for purchases would be one of them for sure.

(The reason I use Amex is for the reward points and for access to the airport lounges when I travel)

Angelina Mancuso

December 7th, 2010
11:24 am

I stopped using my cards when times got tough. It is now to the point that my card companies call me every so often to ask me what they can do to get me to charge something. Each time I have to explain to them that I am not going to get myself in trouble by using credit cards. If I needs or want something now I save the money up. I’ve also cut my spending so I usually have the cash to pay for the items I need. I also stopped spending change and only use paper money when I buy. I’ve saved up 1,000 dollars so far just by doing that. I find that people throw away pennies other change on the street, I pick it up because it all adds to my savings. If people only knew! I still see people charging everything including fast food! I can’t imagine the financial trouble they are or will be facing! Happy saving everyone.

tim

December 7th, 2010
11:27 am

I have the new federal reserve gold card. My buddies over at harley davidson said it helped them.

ron allen

December 7th, 2010
11:29 am

when the cash back rewards programs are history because of obama and personal responsibity,what will we do then?

George Bailey

December 7th, 2010
11:30 am

I have 4 CC’s Visa Signature, Visa Signature Rewards, World Master Card and Amex Optima Platinum. None come with annual fees. I also have a Home Depot and Lowes store credit card as well as Best Buy and Amazon.

What do I use the most? My Visa Debit card. lol. I do use the CC’s for purchases that will be paid off at the end of the month and for my Onstar and XM accounts because it’s eaier to track through my bank account. CC’s are great tools to build credit rating, Store cards like Best Buy are great, becuase they offer 3 year no interest financing. The trick is to get that deal, but then pay the balance off within 6 months. You definately don’t need any added expense.

So yes, cash is king, but a little credit in the right places won’t hurt you either.

Careful With A Buck

December 7th, 2010
11:35 am

We use our Visa and Discover cards and always pay the bill in full each month to avoid interest charges and get a little money back as a reward. We have never lived beyond our means or spent wildly because of easy credit and owe nothing to anyone other than current monthly bills like telephone, cable, etc. A properly used credit card can be a real convenience for those who are responsible but it can apparently be a nightmare for those who use them to spend what they can’t afford.

Dave

December 7th, 2010
11:47 am

I learned the hard way, I still have one (cash back) credit card that I pay in full every month. Life is good.

HTH

December 7th, 2010
12:06 pm

Dave Ramsey. I agree. If you want very good. Very sound financial advice. Listen to him. You don’t want to be in debt forever. I say this because I have listened to Dave over the years. Everything he has to say is in a person that borrows monies best interest. Listen carefully. Some people are not as savvy as others. Dave make good sense.

JJ

December 7th, 2010
12:09 pm

@Angelina Mancuso – I NEVER spend my change. It all goes into a jar at home, then right around Thanksgiving, I go dump it at CoinStar, and I have enough money to do Christmas shopping for my entire family! I cashed out $750 last year.

Anne

December 7th, 2010
12:20 pm

AGL pays $2.4 billion for Illinois company, distribution HQ to move………..
Now we know what the rate hike was really for….geesh… so screwed again

Michael

December 7th, 2010
12:24 pm

I have not used a credit card in two years, and I no longer pay 21% either. If I can not afford to pay cash, I do not buy it