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I’m hoping you can help me with a question that seems very hard to google for some reason.

I have $20K in debt on 4 cards, and I have set up a plan to pay off the deferred card on time, and the highest interest after that while still paying minimums on everything.

I have roughly $2K a month in expenses. Some come directly from my checking account but about $1200 in my monthly expenses I use credit cards (groceries, cable, gas, etc)

My question is this: can I use my credit cards for the monthly expenses, or should I really be using my debit card for expenses until I have all the credit cards paid off?

Thank you! Forgive me if this is a simple question.

Ben Miller
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Chelsea
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5 Answers5

46

While you have credit card balances that are accruing interest, you should not be charging anything new to the credit cards. There are a few reasons for this.

  1. When your credit card has a balance that is accruing interest, then any new charges will start accruing additional interest immediately. That means each purchase you make is costing you much more than you think it is, and it will be that much longer before you get it all paid off.

  2. Your goal is to pay off your credit card debt, but if you keep adding to your credit card debt with new purchases, you have now given yourself a moving target. It is much nicer to see that balance drop with each monthly statement as you work toward your goal. Continuing to make purchases on your credit card would be working against yourself.

  3. You’ve got a plan in place to pay off your cards, which is great. Hopefully, as part of your plan you have a personal budget to ensure that you aren’t spending more than you bring in. This is crucial so that you don’t find yourself in debt again. To help yourself with this, you want to only spend money that you currently have. By putting purchases on a credit card, you might be tempted to spend more than your budget allows. Cash, checks, and debit cards require that you have the money before you spend.

Until you are completely debt free, stick with cash, check, or debit card for your new purchases. After you have paid all your credit card balances down to zero and no longer have any credit card payments, ask yourself at that time if you think you have the discipline to use a credit card as if it were a debit card, only charging what you already have in the bank to pay off in full every month. If you aren’t sure, just stick with the debit card and cash.

Ben Miller
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can I use my credit cards for the monthly expenses

Sure you can. But I think you're really asking if it's wise to use the card for monthly expenses.

My answer is NO, especially if you're in so much debt because of overspending.

Advice from someone who paid off a lot more than $20K in CC debt: stick the CCs in the back of your metaphorical sock drawer, and let a debit card and spreadsheet be your friend until you've paid it all off (because you can't spend what you don't have).

RonJohn
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13

While in my heart, I respect Ben's answer, let me play devil's advocate.

You don't mention the details for each card, the credit line, interest rate current balance. Say you have one card that offers 2% cash or equivalent miles. If you cycle the monthly $1200 thru this card, that's $14400 in charges, and $288 in perks you'll get back. That amount shouldn't prompt you into making bad choices, but it should be a consideration.

Ideally, you stick to your plan, pay the debt, highest rate first, and as part of the math, get one card with the best perk to zero balance, and use that as you suggest.

Your question isn't too simple, the opposite is true. It's part of the fundamental debate, one side believing that "debt is evil" and "there is no responsible use of credit cards", the other side "use cards to maximize your benefits, including rewards, purchase protection, etc, while being careful to pay in full each month." Of course, there are a range of people between these extremes. The key point is that you follow a path that's right for you.

If you are able to come out of this debt having changed the habits that got you into trouble in the first place, you'd be on track to continue to manage your finances including the cards. If not, the other answers kick in, pay the cards off and say goodbye to them.

JoeTaxpayer
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I think a better method, IF you have the self-discipline to control your spending (and I do realize that may not be the case), would be to get a new card that offers 0% interest for a year or so, and use that for current expenses while you pay off the current cards.

Of course this assumes that you're 1) going to be able to pay off, or at least significantly reduce, the amount on the current cards; and 2) will have enough extra to pay off the 0% card at the end of the period. If you don't, then using cash/debit for current expenses, and cutting those expenses to the bone, is the better solution.

jamesqf
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As the other answers say there are good reasons not to use your credit cards but I would add the one time you should use them is if there is anything you have to pay for online. Generally I would assume that online shopping is one of the things that you have cut out in your plan, but something like concert-tickets for someone's birthday or necessary travel may require an online purchase and in that case the extra protections afforded by the credit card are worthwhile. Do not use your debit card online.

Dragonel
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