Don't Cut Up Your Credit Card

You must have heard of advice from financial advisors to cut up your credit card so that you will never once be tempted to spend again. In my humble opinion, that's like taking lozenges to soothe a sore throat: it doesn't get rid of the problem.

And the problem is obvious. It's the user of the credit card, not the credit card. It's also not the banks behind them, although they are the one who market the card as a must have, and the use of it as a way to showcase one's affluent lifestyle. The banks and the people behind the card wants you to think you are well-to-do, (ironically) by spending as much as, or all of your money. Who else will pay for their logo hanging precariously from their building, their annoying tele-marketers, their pretty roadshow promoters, and that heavy-weight Chief Executive Officer and his office space at the 99th floor?

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So, what's the solution? I control my spending. I try, as far as I can, only purchase what is necessary, not what is desired. I have to admit that in this day and age, when your sense of fashion (and not only your personality) defines your acceptability, or when it's cool or in to be holding that bulky iPod video player in your hand, or when you really want that trip away from the Joneses in a packed two week tour of the whole of Italy. But still I have to try. No sense in following the masses when I have no money left for retirement.

But why should you not cut up your card and keep it? Besides the fact that cutting up plastics are really a waste of natural resources, the cards can sometimes offer great bargains at times when you have to buy what you need. But after signing on the dotted line, or punching your name and the numbers into your browser, make sure that:

1. Settle your debts. How to Settle Your Debts

2. Pay your bills on time, please. Although banks hate it when you don't pay (because you filed for bankruptcy), they love it when you don't pay on time, because they can then legally slap you with a $45 fee (or-whatever-they-please-interest-rate) for late payment, by simply just mailing you a letter.

3. Make sure there are no recurring annual membership fees. If they do, call up your bank and threaten to cancel. They usually end up waiving the fee (at least in the country where I live).