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If you are overusing your credit cards, here are some tips we've collected for reducing credit card use. Old habits are hard to break. It may take time. However, the effort is worth it.

1. Don't use credit to add to existing debt except in the case of emergencies -- particularly health care emergencies. 

2. Set goals and keep a reminder of your goals somewhere where you see it all the time. A daily reminder of your goals can help break the temptation of seemingly painless spending on a credit card. For instance, keep a photo of your goal on your refrigerator -- or by your bed.

3. Leave your credit cards at home. If you really want to make a point to yourself:

  • Put your credit cards in a plastic container.
  • Fill the container with water.
  • Put the container in the freezer.
  • Defrost the cards when you really need them.

4. Cut up all your credit cards except for one card that you keep for emergencies.

If having a credit card is not too much of a temptation to you, it is advisable to keep your accounts open, and to at least use a credit card every six months, or even better, every three months. Credit card companies have been known to close accounts because of inactivity. Closure can hurt your credit score which can impact your ability to get more credit when you need it, and other unexpected areas such as automobile insurance premiums. (The result of a closure is that you automatically increase the percentage of total available credit you are using. This decreases your credit score.)

5. Only keep the one or two credit card accounts you really need. Cancel the rest. The problem with this scenario is you won't have the credit available if you need it for medical expenses, or if you unexpectedly lose your job. Decreasing the amount of outstanding credit may also hurt your credit rating - but that's a small consideration compared to what free spending you can't afford will do to your credit rating.... it's called bankruptcy.

6. When you get new credit card offers, don't open an account unless there's a reason to. While it's helpful to have as much credit as possible in case of one of life's unexpected turns, planning for the "what if" doesn't work if you spend the money unnecessarily.

If the new cards offer a rate lower than your current rate, you can use them to negotiate with your credit card company to lower your rate of interest. If the new offer includes credit life and/or disability insurance, or job loss insurance -- and it's better than you have on your current cards -- if all other things are equal, consider transferring your balance to the new card. If you're spending too much, cancel the old one.

7. If new card offers are too tempting to resist, you can stop most new offers from being mailed. You can opt out for up to five years by calling: 888.5.OPTOUT (888.567.8688). You can call to reinstate receiving offers if you change your mind.

8. Pay everything with cash -- or cash equivalents such as checks or debit cards when you can't use cash. Debit cards look like credit cards, but remove money directly from your account when you make a purchase. Some advisors recommend labeling envelopes with each different part of your life. For instance, food, entertainment etc. Put the cash in the envelope that you've allocated for the week or month. When the cash is gone, don't spend any more money on that category until the next period.

9. If you do use a credit card -- don't charge more than you know you can pay off when the bill arrives.

Special thanks to
Joseph Daniel
New York, NY

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