Why You Should Consider Taking a Brief Credit Card Hiatus This Month


When used correctly, credit cards can be effective financial tools. Using them responsibly can help you increase your credit score, earn cash-back and rewards points, and more. Even so, it might do you some good to take a brief hiatus from using your credit cards for one month.

Do whatever you need to get your credit cards out of sight so you are not tempted to reach for them. Put all of your cards somewhere you cannot get to them, ask a trusted family member to keep them at their house so you cannot access them, and clear any saved cards from your online shopping account. Then, read on for a few reasons why putting the plastic away and opting to use cash and debit cards this month can improve your finances.

Save money on interest

Credit card interest rates are extremely high – sometimes reaching over 20%, and that is before taking into account even higher rates you might pay as a penalty for not using the cards properly (like spending over the maximum limit). Adding to your credit card balance every month means paying that high-interest rate on a larger outstanding balance.

On the other hand, if you go on a credit card hiatus and use cash or a debit card to pay for things, you will not pay any interest on those purchases. A $50 dress will be just that – $50, whereas if you were to use your credit card instead, without paying the balance off at the end of the month, that $50 dress becomes much more expensive.

Improve your credit score

The less of a balance (the amount you owe) you carry on your credit card month-to-month, the lower your utilization ratio, which is an important figure used to calculate your credit score. The lower your utilization ratio, the higher your credit score.

For example, if you have an available credit limit of $10,000 across all of your cards, and carry a balance of $3,000, your utilization ratio would be 30%. Not bad, but it could be lower. By putting your cards away for the month and not adding to your debt (and hopefully paying it off) you can lower your utilization ratio and increase your credit score by at least a few points.

Take control of your spending

If your spending has gotten out of control, you are having trouble tracking where your money goes every month, or your budget is non-existent, taking a temporary hiatus from using your credit cards can help get you back on track.

Credit cards are a simple way to spend money you do not have or spend on things you do not need. Pay for your purchases in cash for a month and you will be more aware of what you are buying, which is a great way to reign in your spending and get it under control. After the month is up, you will likely be in a better place with your spending and be ready to start using your credit cards again in a more responsible way.

Focus on paying off the debt you already have

If you are in credit card debt, adding more to that debt every month by using your credit cards is only going to put you in a deeper financial hole. Taking a break from using your credit cards allows you to focus on paying off the debt you already have, instead of accumulating more debt.

What can you do with that debt you do already have? Stopping using your credit cards is a great first step. Next, you can contact a debt relief company to discuss your options. From debt consolidation to credit card consolidation and more, there are many options of debt relief that you can seek in conjunction with changing your credit card spending habits that will help get you out of credit card debt once and for all.

One month to a better financial path

Taking a short credit card hiatus this month might be just the thing you need to improve your finances. From controlling your spending to increasing your credit score and more, the benefits of going all-cash might just outweigh the benefits your credit cards offer. Consider applying these tips while on your debt relief journey and watch your debt decrease as you gain control over your financial future.