The 7-Day Turnaround, Day 3: Cut Up Those Credit Cards

This is the third article in Frugal Dad’s week-long series, The 7-Day Turnaround: One Week to Change Your Family’s Financial Destiny. Each day brings a new step to implement and help you get control of your finances.

The person that coined the phrase, “When you find yourself in a hole, stop digging” must have had credit cards. Used wisely, [tag]credit cards[/tag] can prove to be a legitimate financial tool for covering expenses and consolidating automatic payments, monthly drafts, etc. However, most credit card users carry a balance from month to month, paying banks millions of dollars in interest and fees. If you are in the middle of a financial turnaround I recommend ridding your wallet of the temptation to spend plastic.

Put your credit cards on the chopping block. For some people this step causes more angst than all the others put together. People feel some sort of loyalty to these little pieces of plastic, and the banks that offer them. Cutting them up is about as easy as breaking off a friendship with your best childhood friend. If you are serious about turning your life around you must get rid of credit cards. One caveat: hold on to your lowest-interest, no-fee card until you complete step 2, building an emergency fund. This will leave you some available funds in the event of a major financial disaster. Once your three month emergency fund is in place cut up that last credit card and rely on your emergency fund as a personal credit line. Keep this last “emergency” card in a sock drawer at home and away from your wallet, else you might confuse the lastest sale at Nordstrom’s with a true emergency.

When your financial turnaround is complete, resist the temptation to sign back up for a credit card. Despite what Visa and Mastercard would like you to believe, it is possible to live without credit cards. Debit cards offer the same convenience, and regulations protect debit card users against fraud in the same way credit card companies do. Many [tag]debit card[/tag] products also offer [tag]rewards[/tag] and travel points that use to only be associated with credit products. Remember, no one ever got rich offer their Discover points so don’t fret over rewards too much. When you are millionaire paying for an airline ticket or a Target gift card won’t cause you any heartburn. Continuing to deal with credit card companies might.


  1. The person that coined the phrase, “When you find yourself in a hole, stop digging” must have had credit cards.
    What a terrific statement… and how true, how true!

  2. I’ve still got all my cards, lol. They’re tucked away in a drawer upstairs. Most expired last month. And I haven’t activated the new cards.

    For me, the hardest thing about cutting up my cards is they represent security if something bad was to come up. I think it is because of that that your tip to save an emergency fund is an excellent idea.

    The best thing I did, though? Take them out of my wallet! 🙂

  3. Hello,
    I like your blog very informative and I myself is a crusader of saving and earning money because I am a regular employee and want to have a passive income through investing.