Editorial Policy

Tips to control card balances from creeping up

Erica Sandberg

August 19, 2015

QHi Erica,

No matter what I do, I cannot keep all my credit card balances to zero when I should. I get into debt, then pay it off and then they creep up again. Is credit just not right for me? I'm beginning to think there are some people like myself who should just not have credit cards. I'm facing another $3,000 debt with my Bank of America and $600 on Capital One. And I'm like, what?? How did I get here? It's so depressing. How bad would it be if I close my cards forever and never have credit cards again? –Jess

ADear Jess,

In the past I might have said, “eh, not everyone can and should use credit cards. If you can't charge advantageously, forget about it!”

However, it is becoming increasingly difficult to lead a cash-only lifestyle. Sure, you can get by with prepaid cards that you fill up with your own funds, as well as debit cards and payment companies like Paypal that are linked to what you have in a checking account, but you miss out on some major advantages:

  • Consumer protection. You will not be held responsible for fraudulent charges, and if your card is stolen, the issuer will protect your credit as well as make sure you have a new card to use quickly. You can dispute charges for items that were not shipped to you or arrived damaged. Depending on the policy, you may also have extended warranties and other insurance products.Ask Erica
  • Travel security. Booking a hotel or renting a car with a debit card can tie up funds you may need for your trip. Hotels may put a hold on your checking account for the cost of the room for your entire stay, plus a security deposit, mini bar and other incidentals, Not all car rental companies take debit cards and those that do may require a security deposit.
  • Credit rating. If you ever want to buy a home with a mortgage or finance the cost of a major purchase like a car, furniture or an appliance, a history of responsible borrowing with a credit card will help tremendously. Along with loans, credit cards will appear on your credit report and if you use them well, your credit scores will go up. Good scores translate into other loans with low interest rates, and that can save you many thousands in fees when you finance something like a home.

Yet even with these benefits, the drawbacks can be enough to give you pause. The fact is that debt is horrible. Interest fees that are tacked on to rolled-over balances are expensive, and it can be tough to scrape up enough for the minimum payment much less pay it off entirely. Then if you skip payments or hit your maximum, your credit rating will tank. Of course it's distressing!

You can't close the accounts without paying the balance to zero first, but even after you do (and you clearly know how as you've done it before!) consider asking for a credit limit reduction instead. Maybe you just have too much rope with which to hang your finances. Many creditors will let you pull back, so think about what is more reasonable. Maybe a $1,000 credit limit with one and a $500 with the other will keep you on the straight and narrow.

Another solution is to not keep the cards on your person. Tuck them away in a safe spot in your home so you aren't tempted when you're out shopping. Remove account information from online retail sites, too.  To keep positive information flowing onto your credit report, have a small fixed expense charged to the card (such as Netflix) and connect it to your bank account so the payment is automatically deducted.

Also, make a habit of getting more connected to your finances. Check your activity on the credit card company's website every day. Why not? It's free and easy. When you see the figure is about to reach the “uh-oh” point, you should stop charging.

And if none of that works? Then yeah, feel free to ditch the plastic. This is your life, and if that's what it takes to remain debt and stress free, go for it.

Got a question for Erica? Send her an email.