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credit cards

One of the major mistakes that credit card holders make is spending more than they would be able to pay for. From being a great financial instrument, the seemingly innocent credit card becomes a financial burden. It is not bad per se. It is the unwise use of the card holder that makes it a not so good idea.

Impulse buying is a water-loo that credit card holders need to avoid. Often, these impulse shoppers end up with things they do not really need. These things would just end up rotting in the closet or down in the basement along with other purchases.

The convenience and the illusion of not having to take out cash when shopping has somehow given the wrong idea to our “cashless” society that there are no dents on the budget when you use a card. A blinding illusion that hits you right in the face once the bills start coming in. It is easy to max out credit card limits but very difficult to get out of the debt. In the long run, the person gets in deep debt and earns a failing credit score. Credit ratings are in fact important in other, more important financial transactions and yes, even in being granted new and higher credit limits or another line of credit.

Zeroing out credit card debt is challenging but not impossible. But it would take discipline, patience and planning. First, it has to be a conscious decision to want to get rid of the debt. This would mean serious cutting down in expenses and living within means. Second is to get out of the habit of paying only the minimum required monthly payments. Increase the monthly payments so as to hasten the decrease in payables. This would also reduce the interest that is charged against the principal amount owed. Try checking with your credit card provider for any accommodations that can be given should you decide or be able to pay debts sooner than expected. In most cases, credit card providers are amenable to adjusted payment schemes that would turn you into a paying cardholder instead of a delinquent one.

cutting credit cardWhen you receive any additional income from whatever source, like overtime pays, bonuses or commissions do not spend them. Allot them for debt payment. If you have more than one credit card, try to do a balance transfer. This means clearing out balances in one card by transferring all that is owed to the other one, At this point, you will only have to worry about one credit card, with one credit and payment scheme. Once you have cleared one card from debt, have it cancelled so as not to get yourself tempted into charging again.

After you have devised all that you need to do from wiping out your debt, stop fretting. You have a plan and you are going to see it through to its completion. Have faith in what you can do. Life does not end when you cut down on the non-essentials. In fact, you might even find more meaning and fulfillment in the non-tangibles that you might have overlooked before. While this all seems dramatic and intense, realizing what really matters in life can actually be the way for you to get your act straight, learn about priorities and start saving money. Life is to be enjoyed. No one deserves to be burdened by debt.

Author Bio: Francisco Arbes aim to help individuals in making wise decisions about money saving, practical spending, insurance, credit and debt, investing, and more through his blog; Money and Finance Journal.

Images courtesy of luigi diamanti and Sura Nualpradid /

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  1. Getting out of credit card debt is extremely important if you have ambitious long-term personal finance goals. I have never done a balance transfer, but would consider it if it would help me pay down credit card debt faster. Thankfully at this time I do not have any.

  2. “The convenience and the illusion of not having to take out cash when shopping has somehow given the wrong idea to our “cashless” society that there are no dents on the budget when you use a card. ” Well said, Francisco. This deception has caused so much heartache and trouble in America. I only hope we all wake up and smell the coffee before it’s too late.

  3. “Zeroing out credit card debt is challenging but not impossible.” Well said! In the long run it requires a plan and having the motivation to get out from under it. I saw it as a challenge to overcome that kept me going over the years to wipe it out.

  4. I absolutely agree that getting out of credit card debt is challenging yet possible when you stick to your plan no matter how hard it gets. I paid off $14K in one year, and I haven’t looked back since….best financial decision I’ve made thus far!

    1. That is quite the achievement. By the time I was done, I was paying off around $13k per year. It is a lot of money, but worth it when you are done.

  5. My wife and I recently decided to cut out credit cards altogether because we weren’t getting them paid down but rather making aimless payments and reloading them every month full of debt. So we’ve taken a different approach and decided to cut them out and pay them off once and for all.

    1. I had that same decision, but then I went back and started to earn rewards on them. I changed my thinking and started using credit cards to reward me.

  6. Living on cash really brings home just how much you’re spending! It scares me sometimes to see how fast £20 can disappear often on non essential items but you can spend the same amount on a card without even noticing.

    1. Ah, going the cash diet. That is always a shock to the system when you only have cash to spend and can’t just pull out the plastic.

  7. Getting out and staying out of credit card debt is the only way to ever be free from working to make payments. By the time you’re done, you don’t even remember what you bought that seemed so important at the time. I do think there is a use for credit cards if you are responsible and pay them off every month. We get too many rewards to pass up from using cards to pay regular bills, but if you can’t pay it off monthly, it is better to not use them.

    1. I still don’t remember what I purchased on my cards. How in the world did I buy $50k worth of stuff and not even know what it was?

  8. I agree that you should allocate any extra income to paying down your debt. I received a transfer and promotion earlier this year and have put all of the extra money to paying down my debt. I’ve never seen it drop this quickly before. It’s very exciting.

  9. We use credit cards for all our purchases so we are not disillusioned although it happens to many people. If only using credit cards had the same psychological effect as using money some may be in a better place, then again there are people that can’t spend cash either. Just stop spending more than you earn, pay cash and be done with it. I also agree that any extra income should go to paying down debt and not to be looked at as “free money” to spend. When there is debt, there is no “free money” to spend.

    1. I am doing that now. I am working on getting everything down to a science, but it is working out very well so far. Thanks for stopping by Mr. CBB!

  10. I usually budget a good portion of my tax refund (If I’m lucky enough to get one) and any annual bonuses towards debt reduction. Any extra money that rolls in periodically also gets focused on debt reduction. Still, it’s a tough go and it’s probably easier (I think) to not get into debt in the first place.

  11. No credit card debt here thankfully, but I did use a similar pay down strategy (throw everything at the debt) with my student loans when I had them. Now we’re putting any and all extra money into savings.

  12. “It is the unwise use of the card holder that makes it a not so good idea.” So true. Credit cards aren’t bad; it’s the users who abuse them. And unfortunately, a large bulk of those users, don’t even really understand the damage they are doing. I wish more people got it and I’m hoping the growing popularity of PF blogs will help people catch on sooner.

    1. I think people generally understand it, but it is their habits that are dictating how they use credit cards. You have to break the habit in order to use credit cards successfully.

  13. I know someone who uses her bonuses for her leisure expenses instead of putting it in the debt payment.