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Need to Stop Using Credit Cards for a While? How to Maintain Your Credit Score

Oct. 17, 2014
Credit Cards
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If you’ve had some trouble keeping your spending in check while using credit cards, taking some time away from plastic might be a great idea. However, when you go cold turkey on credit, make sure that your credit score won’t suffer. Here are five tips for a happy, temporarily credit-card-free life.

1. Downgrade, don’t cancel, when you need to stop using credit cards

Your credit score factors in your overall credit limit, the number of accounts you have, and the average time you’ve had those cards. Keeping your credit card accounts open improves all three areas. Instead of closing your credit cards, stick them in a drawer so that you won’t be tempted to use them. They’ll still work silently in the background to boost your FICO score. To avoid paying annual fees on cards you don’t use, downgrade those accounts to their no-annual-fee versions.

2. Set up automatic payments

Once you’ve sworn off credit, it’s easy to forget to pay your bills. Be sure to set up automatic payments on your credit card bills. That way, if you’ve linked your credit card to any automatic payments like gym memberships or Netflix accounts, you won’t be surprised by late fees and high interest rates.

3. Remember to make small payments every once in a while

Credit card companies are allowed to close your accounts if they’re inactive for a long time. To avoid that unpleasant surprise, break out each card for a small purchase every once in a while. If you’re worried about the temptation to spend, automatic payments can actually be your friend: That Netflix account or gym fee can keep your account active without you ever having to look at your credit card. Just be sure to keep on top of the bills!

As a side note, some credit cards rewards expire after a few years. This is a good time to check up on any rewards you might have earned, and cash out if you need to.

4. Consider a balance transfer card to cut down on interest payments

It sounds strange to use a credit card to solve your credit card problems, but transferring your balance to a 0% interest credit card can actually help you conquer your debt. Consider signing up for a card that offers 0% interest on balance transfers for at least a year and doesn’t charge a balance transfer fee. Avoid using that card for your everyday purchases, but use it as a tool in tackling debt.

5. Keep an eye out for unauthorized purchases

Though you’ve put your credit cards are out of sight and out of mind, you’re still at risk for identity theft. Remember the Target data breach? It affected cards used for purchases made nearly a month earlier. Consider signing up for a service like Mint and setting alerts for purchases over $10, and monitor your credit score for an irregularities.

Getting out of debt is never easy, but you’ve made a great first step in swearing off the temptation of credit cards. With persistence and good financial management, you’ll get back on track.

Man signaling time-out image via Shutterstock.