Get Out of Debt Don't Cut Up Your Credit Cards

You heard me right... Don't cut up that credit card if you want to get out of debt. I know that a lot of experts suggest that you cut up and throw away your credit cards as a deterrent to using them and as a manifestation of your desire to get out of debt, but don't you do it. There is nothing that the credit card companies would like more than for you to cut up your credit cards before you pay them off.

The problem is that most people wait until they have maxed out their cards before they decide they need to get out of debt. Then they cut up their cards and say they will never use than again. Well the fact is that the cards are maxed out and they really can't use them unless they up their maximum or pay down the card. Banks absolutely love people who have maxed out their cards and pay the minimum payment for the life of the card. This maximizes the return on the banks investment.

Your Debt Doesn't Disappear With The Card

The fact is, cutting up your card doesn't mean the debt goes away. A few years ago I remember looking at a bill from a major department store that I hadn't shopped at for more than a decade and I remember destroying my card right after using it, thinking what a mistake that was. Looking at the bill, I was surprised when I saw that the balance was still in the hundreds of dollars. Whats worse is I am sure that I had never put more than a couple of hundred dollars on the card in the first place. I had paid the minimum payment for more than 10 years and literally had paid nothing toward my debt.I had simply made an automatic payment for the minimum and forgot about it.

Is Auto Pay Such A Good Idea

Ok so now I am taking on another sacred cow, Auto payment. For your convenience, most banks now provide you the ability to set and forget payments to your creditors. This is a great idea... right? Well, that depends. Set and forget is great when you leverage it to get out of debt, but if you pay just the minimum it is keeping you in debt and the only benefit is to avoid late fees and make sure the banks get their money on time. Remember, forgetting about your debts works only in the bank's favor.

Don't Forget

The only way to get out of debt is to be mindful of it. If you ignore it you will, at best, find it hasn't changed after decades of paying on it. At worst, you will find your debt has increased beyond anything you could have imagined.

Keep the Card

Don't play into the bank's hands by cutting up your cards. Instead, try punching a hole in it and nailing it to your wall in a prominent place where you can see it every day. This way it can remind you that you are still in debt. The idea is to use it to motivate yourself to pay it off. When you have paid off the card, then you can celebrate and destroy it as a gift to yourself.