How Cutting Up Your Credit Cards Will Help You Get Out of Debt

Before you read this post I need you to promise me you won’t show it to Dave Ramsey!  Seriously, he will write me off completely and it will break my heart 🙁

If you’ve been here before you know we used Dave Ramsey’s Financial Peace System to get out of debt!  We took his advice as gospel and followed everything he said!

I even gave in and….wait for it…..cut up my Target RedCard?!?!?  I mean, what kind of plan requires you to turn your back on your red-shirted-khaki-pantsed family?  But I digress…

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I know many people have a difficult time with the part of Financial Peace University (myself included) where Dave Ramsey demands implores you to cut up ALL your credit cards, no questions asked and NO exceptions.  Let me clarify, I do agree with his advice and I do believe that his system works and when a system works one of the worst things you can do is deviate from said system thinking you know better…

But I don’t know better, and I do think that Dave Ramsey is a genius and he has completely changed our lives!  That being said, I have a confession to make….we have modified his credit card policy slightly.



It seems that there are two schools of thought when it comes to the great credit card debate…

1 | Use your credit cards for expenses and pay them off each month, avoiding any interest charges while also possibly earning various rewards and/or cash back.

2 | Cut up all your credit cards, pay them off in their entirety, close every account and never open another credit card account ever again as long as you live; cross your heart and hope to die!



But for us, it hasn’t been so black and white.  We have fallen into somewhat of a grey area.  When we went through Dave Ramsey’s program the thought of closing all of our credit cards scared me half to death!  They were our fall back, our security blankets but the problem is they actually offered a false sense of security and in turn pushed us more into debt.


How cutting up your credit cards will help you get out of debt - Life of Stones

We decided to cut up all of our personal credit cards, except for one…

We left one card open and active that we have had for 10+ years.  This was a tough decision, and while we hope to close it at some point in the future we decided to hang onto it for now.

When you do the Financial Peace University program you will keep only $1,000 saved as an emergency fund.  We kept that separate in another account so it wouldn’t be used, so our checking account was virtually drained each month after paying the bills.


We have a couple of monthly bills that were paid automatically on that credit card each month and while we switched all of our spendings to a cash envelope system or our debit card, I was worried to switch the auto-pay bills to the debit card as well.

One of the reasons we used to use our credit cards for all expenses is because it makes it so much easier to balance your checkbook at the end of the month!

When we use our debit card for all spending we have pages of charges to reconcile each month, which leaves more margin for error in our checking account.

My concern was that the empty checking account coupled with that extra margin of error created the perfect opportunity for me to forget to record an auto withdrawal and overdraft our checking account (technically it would just pull the extra from our emergency fund in our savings account, but it gets messy and my OCD doesn’t like that)!

We also use it for our gas.  This is important to us for a few reasons…first of all, ain’t nobody got time to go inside the store and pay cash?!?!?  And secondly, our credit card was compromised twice at the gas pump!

And while VISA check/debit cards do carry the same fraud protection as actual credit cards do, you must use the debit card as CREDIT for those rules to apply and I don’t know about you, but I always forget to run it as credit instead of debit.

And while I know it’s dramatic, I really worry about someone cleaning out the little money we do keep in our checking account at this point in our journey!



I know, I know, you use your credit card but you pay it off every month…

If you are able to drastically change your habits and really manage your spending then I totally understand why you might continue your use of credit cards as they are super convenient!  I do believe there is such a thing as using credit responsibly.

The problem is (and this is why I say we might close our last card at some point in the future), and I’ve mentioned this before, is that you just don’t feel the spending when you use credit so you often spend easier and more often than if you’re using cash.

Whether you’re paying it off all at once or incurring interest, you usually don’t keep track as closely as you do when that money is being taken directly from your account!  And it’s very easy to start slipping and before you know it, you’re finances are in distress again!

But what about all those rewards and airline miles?

Credit card perks can be super enticing!  I’m a sucker for a deal, but here’s the thing (and you’ll hear Dave Ramsey say this a lot)…you ask any wealthy person you meet how they got where they’re at and you will never have them tell you that using credit cards to get cash back made them rich!


It’s true, I mean we all love free stuff, but you always have to look at who’s offering you that deal, and more importantly, why?

Credit cards are a billion dollar industry!  Trust me, they are not in business to offer you double points at the grocery store or help you earn free flights so you can travel the world!

The points are an extremely effective marketing strategy to get you to spend a crapton of money on their cards and pay them a buttload of interest in the process!  So go ahead, earn your points, fly the friendly skies, but please…proceed with caution!



Get out of debt…

If you have credit card debt today you really need to give some serious thought to cutting up those cards!  It can be a tough pill to swallow but it is going to be incredibly difficult, if not impossible, to get yourself out of debt if you continue to use credit cards.

The only way to tackle that debt is to stop spending and pay it off as quickly as possible using the debt snowball method!  Get on a budget ASAP and be sure to save your emergency fund to help you to stop relying on those credit cards as your backup plan!


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Be sure to have a plan…

Maybe you’re not in debt (way to go!), maybe you’re actually in pretty good financial shape and you effectively use and manage your credit without any issues….that’s is great and considering over 38% of Americans carry some amount of credit card debt, you should honestly be pretty dang proud of yourself!  Maybe you could teach the rest of us a thing or two!

But if you’re not as fortunate, maybe you’re still blindly swiping blissfully unaware of the chaos around you.  Maybe you have a very clear picture of your finances, and it’s not looking so good…

Now we keep a very close eye on our credit card spending.  We allow a few things only on that card and it is paid off immediately from our account as soon as the charges post!  We have agreed to the charges that will be put on the credit card and do not deter from that plan.

Because we have worked so hard to make major changes in our money mindset and track our finances, we are confident that we will not fall into old patterns with credit card spending!


Here’s how to turn things around…

» Stop using the cards immediately and cut them up!

» Call and close the account.  If you skip this step the account will still remain on your credit report even after it’s paid off.  If you have great credit then closing it shouldn’t affect your score much.   We closed many of our accounts and our scores are still super high!


TIP » If you are working to repair your credit you might want to leave the accounts open for a while.  Part of what factors into your FICO score is the ratio of balances to available credit, so having a substantial credit limit with a zero balance is showing that you can manage your credit instead of maxing out every dollar available to you!


» Switch to debit cards.  We already had a debit card through our bank account, so that was an easy switch for us.  It takes some getting used to, but we’ve made it through alive 🙂



Another thing we did was finally give in and sign up for a Target REDcard but the debit card, not the credit card (that little guy went to heaven).  I refrained for a few months, especially since I’ve greatly curbed my Target addiction, but I felt like a piece of me was missing and I really liked the extra benefits the REDcard offered.

Even though saving 5% is not a ton, the sales tax here in PA is 6% so it makes me feel as though I’m shopping tax-free (almost)!  Plus, I love the free shipping!

Before I had a REDcard I used to always buy extra items to get my shopping cart to $50 for that free shipping!  I have a personal policy to avoid shipping charges whenever possible so I found myself justifying extra purchases just to avoid those shipping charges, which is counterproductive…

The REDcard debit card has the exact same benefits as the credit card…you can order anything and it’s free shipping…always!  It’s really great because I often want to order smaller things and don’t have to pay for shipping on anything!

They also have extra perks such as early releases or sales for REDcard holders only, so this way you can get all the benefits the REDcard has to offer and none of the interest!  Don’t forget to combine those benefits with Cartwheel for some extra savings!

What are your credit card habits?  Have you cut any cards up to try and get out of debt?  I’d love for you to share your credit cards philosophy with us!  Don’t forget to check out my new Begin to Budget Bundle to help you get started budgeting today! 


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  1. Hey Kristin,

    While I agree with you about cutting up cards, I don’t agree with you about closing cards down. The amount of accounts you have are taken into consideration when they pull your credit score, and closing accounts (as some of the previous commenters have stated) will bring down your credit score.

    Unfortunately, in the world we live in, a good credit score is needed in order to get a house (even an apartment), to get a car loan, etc. I think this is an important consideration, given that closing accounts can hurt people in the long run.

    One of the things that I’ve done, is to set up one automatic payment on a card that I’ve cut up; not only does this keep the account active, but I know how much is going to charged to that card each month, and I can’t utilize the available credit from that card.

    Also, important to recognize that not using cards can ultimately close them down and bring down your credit score.

    Anyway, this is just my two cents!

    Great article, really love your style of writing.


    1. Hi Liz! Thanks for the awesome insight! I agree with you for the most part…what I will add is that the impact on someone’s credit score is relative…we closed probably 4 accounts in that one week period and it didn’t affect our score at all, but we have always had an excellent credit score, plus we still have our mortgage too, other bills, etc…it’s definitely possible to get all those things with no credit score, but not with a bad one, but of course, so much easier! Yes, the auto payment is a great idea, thanks for the sweet compliment! xo

  2. One more thing…be careful about calling and closing your accounts while you’re paying off debt. Your credit score will take a hit, which may be an issue if you have to buy a house, or, like me, have to replace your car unexpectedly. It’s actually better, for awhile at least, to have them open on your account with no balance. If you want to cancel them, Suze Orman says to do it slowly, one at a time, and let your score recover first if needed.

    1. Yes, so to Dave’s point, he wants everyone to eventually have NO credit score at all and no need for it but I agree with you until you’re at the point where you can support it all with a really decent amount of savings I’ll still keep an eye on my score!

  3. Kristin, great post! I have always thought I’ll keep the credit cards and pay them off every month, but sometimes you get busy or something happens and it is just so easy to fall back into it! At this point, what is left of my credit card debt is interest free, and while listening to the Dave Ramsey podcast on a long drive tonight I decided I want to go ahead and cut those cards up…on FB live one of these days! Like you, I need to keep one for a little while, not to actually use. There are places like hotels (I’m traveling tonight) that put a hold on your card, and since I’m putting all my extra cash into that baby emergency fund (replenishing post-car accident…) and then the debt snowball, there’s literally not enough in my checking account this close to payday to put that hold on. But I kept thinking…if I don’t keep the cards, sure, I won’t have rewards, BUT if I don’t have debt, I can afford to do all those things I would use the rewards for! Also, I’ve heard some debit cards have rewards programs, though I wouldn’t pick it just for that.

    1. That’s a great point Joy! I know you can use a debit card for hotels but I never thought of the hold they put on there….I know once we have a good balance build up in our checking account then I won’t worry about it and I’ll switch everything over but for now, I get too nervous lol. Interesting, I never heard of rewards for debit cards!

  4. Kristin – I’m clutching my pearls as I type – GASP! 😉 Ha ha, totally kidding! I absolutely hear you, we did the exact same thing. We haven’t cut up our credit cards, and we’ve done great at not using them. Except one. And I can hear Dave now, condemning me! 😉 I feel like using the cards and paying them off every month is a slippery slope for us – it’s just so easy to not pay them off, and use that money for something else. You are definitely right, that it does give you a false sense of security and makes it SO much easier to just swipe. I think I’ll have to chat with my husband soon about biting the bullet and cutting up that last card so we stop using it for good!

    1. Tana I know, it’s so scary!! We have done really well not using this one unless it’s something we already have the money for and is just a matter of convenience. But we really do have to be careful b/c if we slip up once that’s where it can go south pretty quick!!

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