In the United States, it is reported that the average family has over $8,000 in credit card debt. That's over $1 trillion, and that number is steadily climbing. Credit cards have become a way of life for many people; some rely on them for emergencies and various unexpected expenses, while others use them to buy things that they just can't afford. Still others default to credit cards in hopes of racking up sky miles or other enticing rewards.
That's the trap into which we fell.
My husband and I each have a credit card through a bank with a generous rewards program. The points pile up quickly, and the amount of points needed for various rewards is reasonable. So we figured we might as well use the cards, especially for large purchases, and pay them off in full each month. And that worked. For a while. The problem was, we would lose track of just how much we charged each month. And instead of the $500 bill we were expecting, there would be an $800 bill. Eventually, all of the money we hadn't expected to spend — all of the money we couldn't see — had added up into the thousands. So whatever rewards the credit card company was giving us, it was making back (and then some) in interest.
It became obvious that this method wasn't working for us, as we were clearly the losers here. We decided to pay them off and stop using them altogether. It wasn't easy, but we haven't looked back since. Here are five things I learned along the way that may help if you're also considering breaking up with your plastic.
If You Can't Pay Cash, Then You Can't Afford It 
I came across this pearl of wisdom on Pinterest. We were making purchases on our credit cards that we planned to pay off with our next paycheck. In other words, we were spending money we didn't have. In doing that, we lost track of just how many things we were planning to pay off and were hit with some major sticker shock when the statements came in each month.
I do occasionally use a credit card, but anything we charge gets paid off immediately. And by immediately, I mean I pay, get in my car, log onto my bank's app, and make a payment for the exact amount that I just spent.
If I don't have the money in my checking account to cover the purchase, then I don't buy it. It's as simple as that. But as someone who loves a good sale more than pretty much anything (aside from my husband and kids), I will admit that there was nothing simple about becoming disciplined enough to walk away from 75 percent off holiday decorations.
Getting Rid of Your Cards Completely Is Really Hard 
Like, really hard if not altogether impossible because so many things require you to have one. If you want to purchase any products or services online, you have to provide a credit card number. Want to go for a massage? They'll need a credit card to book that appointment. Any service that requires a "soft hold" (like a hotel reservation or car rental) is tricky without a credit card.
Because of this, my gym membership and Netflix account are charged to my credit card each month. I prefer not to use a debit card because there's higher risk, in my opinion, of someone emptying our checking account. If someone steals my credit card number, I can dispute the charges and not be responsible for those that are fraudulent. We've included the two charges in our monthly budget in order to ensure that they are always paid in full.
The House Always Wins 
If you carry a large balance, odds are that your interest payments are more than the value of any rewards you're receiving. That $25 reward doesn't mean much when your interest for that billing period is $100.
If that's the situation in which you find yourself, then forget the rewards, because the only one who is really making out here is the bank.
Store Cards Are Not Your Friend 
If the thought of cutting up all of your plastic is too much, just start with the store cards. You know, the one you opened to save an extra 20 percent on your initial purchase. These cards often have high interest rates and offer no real benefits after that initial discount.
If you find that passing up an offer to save some money on a large purchase is too difficult, then try freezing your credit. You can go to each of the three major credit reporting agencies and put a freeze on your credit. You won't be able to open up any new accounts unless you lift the freeze, making you think long and hard about whether you really want another credit card. Depending on your state, there may be a nominal fee to freeze and unfreeze your credit, but we think it's worth it.
And as an added bonus, no one else will be able to open a new account under your name while your credit is frozen. Fraud protection? Yes, please!
You May End Up Spending Less 
When I would put something on my credit card, I wasn't as careful about what I spent because I couldn't actually see the money leaving my account. I seemed to have taken a page from Scarlett O'Hara's book with an "I won't think about that now. I'll think about that tomorrow" attitude.
However, I'm pretty stingy when it comes to my cash. Now that there are no large credit card bills to pay each month, I get to actually watch my money grow. The hundreds of dollars I was paying toward credit cards each month now gets divided up between our savings account and my daughters' 529 accounts.
And all of those things that I didn't purchase? I don't miss any of them.
