How to Break Credit Card Dependence

Young father with baby on lap making online purchase while holding credit card.

Credit card debt across the country has been climbing for years now. At the end of 2023, overall consumer credit card debt in the U.S. exceeded $1 trillion, with an average balance of approximately $6,500 per card.

Not all credit card purchases are bad and simply using a credit card isn't a problem. But in cases where financially burdened consumers are relying on credit cards to purchase necessities such as food and gas, that kind of dependence can create a cycle that's extremely hard to break.

So what does it mean to be dependent on credit? And if you are dependent, how do you break free? 

Signs of credit card dependence

Credit card dependency can mean a lot of things, but the core issue is that you can't make ends meet without using credit. Some other signs include:

Not using credit isn't an option

Ideally, you use credit for the convenience and to help build a strong credit history. If you pay your balances in full each month, the cost of using credit can be negligible (if not totally nonexistent).

If your finances are healthy, credit is a tool not a crutch. You should be able to choose to use credit, or to not use credit and tap into your checking or savings accounts. If that's not an option, and you absolutely have to use credit to make necessary payments, that's a sign of dependency.

You use credit even when it costs more

More and more, credit is becoming a payment option in places it wasn't before. Many landlords and rental companies will even let you pay your rent with credit (even though you really shouldn't).

There's usually an added cost to using credit, though. Credit card processing costs money and vendors will typically prefer to pass those costs onto you. 

The alternative, such as paying with your checking account, usually doesn't cost more money, making it the more financially sound option. But if you find that you're still forced to use credit (even when it costs more), that's another potential sign of dependency on credit cards.

Your balance never goes down

Making payments on your credit card debt will help the balance go down (though only so much if you're only making minimum payments). The best way to make progress on a credit card debt is to avoid making new purchases and adding to the balance.

But if you're dependent on credit cards that may not be possible, leaving you in cycle of making payments, using the card, increasing the balance, making more payments, but never making any progress.

Tips for breaking free from credit card dependence

If you're dependent on credit to make ends meet, there's no quick fix to break that dependency, but there are steps you can take.

Shelve your credit cards

This isn't a day 1 fix. In fact, it'll take time to get there. But ultimately, you can't be independent from your credit cards until you're able to stop using them.

To start, though, focus on using them less. Use cash and your checking account as much as possible. Avoid adding to your existing every time that's a possibility. 

You may not be able to stop using credit immediately, but you can stop using credit whenever credit is a choice and not a necessity.

Tighten up your budget

Create a real, manageable budget and include even the smallest expenses. If you're turning to credit out of necessity, your spending is likely outpacing your income. A budget isn't just a restriction on how to spend, it's a high level map that shows you where your money is going. 

Once you understand where your money is going, create priorities and reduce spending on non-essentials. Things may have to be lean for a time while you break your credit dependency, but the reward is no longer being forced to use credit every month. 

Create a plan to pay down debt

The interest on your credit card debt is costly, and it's one of the major factors that can get you trapped in a debt cycle. The best way to break free is to get focused and create a plan to really attack your debt.

Consider the type of debt you have and other factors like your credit score. What tools are best suited to help you repay your debt quickly?

  • A debt consolidation loan may be helpful if you have good credit. It can combine multiple debts into a single payment, and if you qualify for a good rate on the loan, you may end up saving money on reduced interest charges.
  • A debt management plan (DMP) is a good fit if you like the features of a debt consolidation loan, but aren't sure if you would qualify for a loan with good terms. A DMP consolidates your payments and lowers your interest rates, but it isn't a loan and you can qualify even if your credit is poor.
  • Debt settlement or bankruptcy are both tough on your credit, but if your debts are too big to handle they may be a good options to help you get back to square one.

If you're having a hard time finding the best option for you, or you need some one-on-one help shaping up your budget, MMI offers free financial counseling, 24/7, online and over the phone. Let our experts help review your situation and provide suggestions and resources.

Tagged in Smart shopping, Psychology and money

Jesse Campbell photo.

Jesse Campbell is the Content Manager at MMI, with over ten years of experience creating valuable educational materials that help families through everyday and extraordinary financial challenges.

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