Lots of people struggle with high interest rates and credit card debt, but they’re scared of closing their credit card account. They worry cancelling will ruin their credit score, or that they’ll be unable to live without their card. Because of thi,s they hold onto credit cards they don’t need or even want.
While getting rid of your card can affect your credit, it doesn’t have to. If you have paid off your credit card debt and you are tired of paying monthly fees, the best option may be to get rid of your card.
Here are 5 reasons to get rid of your credit card today:
1. You have to pay a monthly interest rate
Most credit cards charge expensive monthly interest rates and annual fees. This becomes an even bigger expense if you make a late payment as you will have to pay late fees. Expensive fees mean that it takes people longer to pay off their debt, and the debt is more expensive than it would have been without a credit card. If you don’t want to pay the fees it may be time to consider getting rid of your credit card.
If your credit card has a generous rewards program that you don’t want to miss out on, contact your bank to see if you can lower the monthly and annual fees. You could also consider joining a credit union that offers lower interest rates on their credit cards.
2. Your credit card encourages you to overspend
Lots of people with credit cards regularly end up overspending as they are tempted by their available credit. While you might want a new pair of designer shoes when you’re in store, you might regret the decision when your credit card bill arrives and you realize that you will be spending the next 10 months paying for the shoes (that you don’t even like that much).
If you can relate to this, remove the temptation by getting rid of your credit card. This way you will only be able to buy things with the money that you have already earned, which will help to reduce the amount of debt in your life.
3. You’re fed up of debt
Debt is a problem for many adults, and it can cause a lot of unnecessary stress and anxiety. If you have a credit card it is likely that you spend time every month worrying how much you owe and how much you need to earn to pay for your debt. Paying off your debt and getting rid of your credit card will have two major benefits; it will get rid of a big chunk of debt in your life and it will reduce your stress levels.
4. You can simplify your finances
Credit cards are like bills and rent; they come with a monthly payment that you can’t avoid and have to plan for. This makes your finances more complicated, but you can easily simplify them by getting rid of your credit card. This lowers your monthly outgoing costs and it means that you can spend less time remembering payment dates and making payments.
5. You can increase your take-home income
This last point is perhaps the most important – getting rid of your credit card will increase your take-home income! As you will have less outgoing costs, you get to keep more of your hard-earned money to put towards your Pay Yourself First Fund. The more you have in that fund the more money you can have work for you!
This makes it easier for you to achieve Financial Freedom, and your life will be much less stressful!
Dr. Tony is the co-founder of MindShift.money and the best-selling author of three books on personal and business finances. Having achieved Financial Freedom at 27, Dr. Tony believes that through Financially Fit Bootcamp and Cash Flow Cure everyone can get there. He has made it his life’s mission to help others live a life where their money works for them—not the other way around.