Tough Love Techniques to Stop Using Credit Cards
Lots of Americans are burdened by substantial credit card debt and poor cash flow. This combination causes these debtors to make only minimum payments on the card balances. On top of this, the cardholders struggle with the willpower needed to stop using the cards. Most understand that they should stop using their credit cards but find it difficult moving from knowledge to action. Accordingly, other techniques must be used to prevent the continued escalation of the card balances because simple force of will is not going to work. In other words, the cardholder must apply a “tough love” technique to himself or herself to break the card use cycle. What are some of these self-administerd tough love techniques?
Close the account
First, the cardholder may need to have one credit card for emergencies when traveling. Debit cards can usually serve the same purpose but many people in extreme credit card debt do not have the resources to maintain reasonable cash reserves in the account linked to the debit card.
Second, the card issuer may have a provision in the cardholder agreement that allows it to accelerate re-payment of the outstanding card balance if the account is closed.
Third, closing the account can have a negative effect on the cardholder’s credit score. I submit that if the card balances are high and creeping higher, the credit score should be of little or no concern to the debtor. Stopping the insanity of increasing balances is the only real concern at that point. I will be talking a lot more about FICO score obsession in future posts.
Shred the Cards
This is somewhat effective but also has drawbacks. Similar to closing the account, it prevents use of the card in a travel emergency. Also, if the cardholder is an experienced online shopper, he or she has probably memorized the card number and/or stored the card number at one or more online shopping sites. Therefore, not having a physically intact card will not help if the cardholder has a weak moment while visiting a shopping site on the Internet.
Ice the cards
On some personal finance message boards (e.g., Women in Red), posters carrying lots of credit card debt are encouraged to put their credit cards in blocks of ice in the freezer. I think this is sort of silly. I have not tried this but I suspect that a little hot water or a 60 seconds with a blow dryer would make the card available to the debtor quite easily. Moreover, what does this technique do to build long term responsibility and willpower on behalf of the cardholder? It may inhibit certain in-store impulse purchases, but not much else, particularly if the debtor has memorized the card numbers. This is about as far away from self-administered tough love as you can get. Let’s move on shall we….
Use an Accountability Partner
What do I mean by “accountability partner”? I am referring to involving a family member or close friend in the custody/control/use of the credit card. The technique is this: If possible, cancel all but one card account. (At least be willing to shred the other cards, folks!) Physically deliver the remaining card to a friend or family member who lives in the same community. This is your accountability partner. This friend/family member should have a good track record of being responsible with use of credit. This friend/famiy member should also be willing to speak to you honestly and directly about your poor habits in credit card abuse.
Instruct this person to release the card to the debtor only if: (a) the debtor is going on a trip where a travel emergency could occur; or (b) there is some other pre-defined true spending emergency where cash or debit card will not work. The fact that the debtor will have to ask for and explain the need for the card to another person will likely discourage frivolous use. Obviously, this will not prevent use of a memorized card number for online purchases.
I have another suggestion to deal with this possibility. Many card issuers (such as Bank of America, where our single Visa Card is serviced) provide online access to the card account and include a suite of account management tools. One of those tools is email alerts. For example, the cardholder can arrange for an email to be sent to one or more email addresses anytime the card is used for a purchase.
So, my suggestion is that the cardholder set up an alert so that the accountability partner receives an email when the card is used. If an alert is sent while the accountability partner is in possession of the card, this signifies that the debtor is using the card in an unapproved manner. Hopefully, the knowledge that such a signal will be sent to a family member or friend will cause the debtor to re-think a proposed expenditure using the card. Indeed, even if it is not feasible or realistic to place your card in the physical possession of a friend or family member, simply including that person in an email alert as to your usage can go a long way in discouraging that usage. This assumes, of course, that the accountability partner is willing to speak up if he or she receives a card usage alert.
No doubt some readers are questioning why any of the techniques described above should be necessary when simple willpower would suffice. The answer is that we have a willpower deficit in this country when it comes to credit usage. Therefore, if self-administered tough love techniques have any chance of succeeding, they certainly should be tried.
SUBSCRIBE: If you enjoyed this, please subscribe to receive the newest hard truth automatically.