How to Stop Relying on Credit Cards

Making a purchase with a credit card.

We talk about credit a lot around here, but the fact is that credit – and, more specifically, how you use credit – is incredibly essential to your overall financial health.

That’s because healthy credit usage leads to positive credit scores, which lead to great rates, which help you achieve any number of money-related goals.

Unhealthy credit usage, on the other hand, leads to debt and poor credit ratings, and terrible loan terms, and even more debt.

Credit is sort of your financial fulcrum. If you want balance, you need to understand the healthy middle point between poor credit and no credit at all. And that means knowing how to step back when you become too reliant on credit to make ends meet.

According to Bloomberg, a US Census Bureau survey taken in late 2022 found that more than 35% of households used credit cards or loans in December to cover spending needs in the past week. That's a worrying number of households turning to credit to make ends meet.

Ideally, credit should be used to supplement your life – used occasionally, strategically. Once it becomes a financial crutch you risk falling into a spiral of credit car debt that's hard to break.

So what do you do if you have to use credit every month to balance the books?

Steps to Minimize Credit Card Usage

Identify the problem

There are a few possible reasons why you’re dependent on credit. Some of the most likely reasons may be that you're:

  • Running a monthly budget deficit
  • Recovering from a setback
  • Overburdened with debt payments
  • Overspending based on habit and wants

Consider when your overreliance on credit began. What were the factors that led to credit becoming such an integral part of your monthly budget? An unexpected expense? A reduction in income?

Figure out how you came to rely so heavily on credit cards makes it much easier to form a plan of attack.

Fix any monthly deficits

In the simplest terms, a deficit is when you spend more money than you make. It can happen because your income was reduced, your expenses increased, or some combination of both.

First thing first – make a budget. A thorough one. You need to understand how large the gap is and where it might be coming from.

Challenge all of your expenses. Sometimes we pay a certain amount for things for so long we just take that as the only possible price. Look at every item and try to find a reduction or possible alternative.

Meanwhile, look into increasing your income. Yes, I know that sounds easier said than done, but having more money coming in is fast way to help reduce your dependence on credit.

Catch back up

If your income is enough to match your regular monthly expenses, it’s likely that some amount of debt is keeping you hooked on credit. That debt may have been built over time, or it may be the result of a sudden, unexpected expense, like a medical emergency.

However you fell into that hole, you need to pick your way back out if you want to rid yourself of credit dependency.

Begin by tightening your budget. Reduce or eliminate all non-essential expenses. If your budget includes room for savings goals, consider diverting part of those funds to debt-repayment.

You should also look into your available debt consolidation/repayment options. If you can reduce your debt payments in a way that makes short-term and long-term sense, it should help you drop your credit usage immediately.

Change the way you do business

As stated before, smart credit usage is a good thing. If you use credit regularly that’s not necessarily a bad thing. It’s when you can’t live without credit that you’ve got a problem.

If the problem isn’t in your budget, but in your habits, you can fix that, too. But it takes work. Consider why you make the choices you do. It may not be as obvious as you assume. 

Most importantly, think about what you value. What are your priorities? And how do your current habits help or hurt your ability to work on those priorities?

And if you’re having a hard time figuring out just where your money problems begin, that's where we come in. We offer free financial counseling, online and over the phone. Get the confidential help and support you need, 24/7. 

Tagged in Advice for families, Debt strategies, Smart shopping

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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