How to Avoid Using Credit Cards in Everyday Life

According to recent Equifax data, Canadians’ credit card debt has risen sharply in recent months, owing mainly to inflation and rising interest rates. If you’re one of those people who can’t pay off their credit card, it’s time to do something about it and avoid using this payment method as much as possible. Swearing off credit cards has several key benefits that let you :

• Save on interest charges : As we know, credit cards often have high interest rates. If you don’t pay off your entire balance each month and make only the minimum payment, you risk incurring a load of interest and ultimately paying much more for your purchases. By forgoing your credit card, you’ll pay only for what you actually spend.
• Avoid overindebtedness : When interest accumulates month after month because you’re not paying off your balance, your debt increases. And, when you have other types of debt on top of your credit card debt, the vicious cycle of overindebtedness begins. Hence, no card, no overindebtedness.
• Protect your credit rating : When you use them incorrectly, a credit card can harm your credit rating. Every time you pay late or make a minimum payment, your rating takes a hit. With a bad credit rating, you’ll find it harder to borrow money for a mortgage, for example. In short, quitting credit cards protects your rating—but it won’t help you build a good credit rating. You can do that by correctly paying off other financial products, like a car loan or a personal line of credit.

Tips on how to quit using your credit card in everyday life

So now that you know that avoiding credit cards highly benefits someone in your situation, you’re probably wondering how to go about it. These tips will help you :

1. Make a budget

As we often remind our readers, making a budget is the basis of all sound financial management. It is the simplest way to know where your money is going and adjust your spending if you need to.

2. Use alternatives to credit

Shopping online typically requires a credit card. But if you want to get rid of your credit card and continue shopping online, there are new solutions. Some financial institutions are offering a new method of debit payment: VISA Debit cards (or virtual debit cards). Unlike credit, these debit products will prevent you from spending more than you have in your account.

3. Use prepaid cards

You’ll be sure not to go over budget. However, be aware that some prepaid cards have high activation fees.

4. Build a financial cushion for unexpected events

No one is immune to the unexpected. Whether for car repairs or an uncovered short-term health problem, it’s best to put some money aside each month to build up an emergency fund. This way you can deal with the unexpected without needing to use credit cards.

Are your debt problems affecting your life? Don’t hesitate to contact one of our licensed insolvency trustees. They will guide you each step of the way.