About Using Credit Cards in a Debt Management Program

One possible reason why a person might not want to use a debt management program offered by a credit counseling agency is because most of them forbid you to use credit cards while in it. Also, some credit card companies might even close your account as soon as you start a debt management program. However you must realize that credit card usage and debt management programs are contradictory to each other and cannot coexist. Here’s why:

The idea behind a debt management program is to reduce your debt. Credit card usage in the debt management plan just defeats the whole purpose. If you are sustaining debt through the use of credit cards it never goes down and at best just stays steady.

Is it fair to focus on paying one credit card while the others wait in line? If you have ever looked at your credit report, you will find that monthly balances on open credit card accounts are listed. A creditor can see that too. A creditor is only concerned about its open account and not the others. Creditors are willing to work with the person in the debt management program as long as everything is fair and equitable and that means everyone is getting paid a share from what you pay into the program.

Credit card use is the main reason you are in the debt management program. Why would you want to continue to dabble in credit card use when it is the major contributor to your problems today? This is not to say that you should avoid them the rest of your life but you should not use them again until you can reset back to square one (have your debt paid off) and you have changed your attitude towards them.

Today we have the debit card with the major credit card logo. There may be subtle differences between the use of a credit card and a debit card but they are not obvious. With a debit card that has a Visa or MasterCard Logo, you pretty much have a secured credit card. You can use them to even shop and pay bills online. The difference is that you must have the funds in the bank to cover it but this is the lifestyle you are trying to achieve in your debt management program anyways.

Bad habits form because they are practiced and it is the same for good habits. Stopping credit card use probably ranks right up there with smoking, gambling, and other addictive behavior. And, like with all addictive behavior, it becomes a habit when it is practiced. Credit card overuse was practiced in order to become the bad habit that caused you to seek a debt management program. Now that you will lose use of your cards, it will force you to live without them and learn how to live on a cash basis. Practice this long enough and you will see one of the side benefits of completing a successful debt management program: a good habit of living credit card free.

You spend more money when you use credit cards. Each of those credit cards you have probably has an annual membership fee. Some of your credit cards may be on double-cycle interest billing which means that even if you pay off what you use in 30 days you could still be charged interest on the balance of the previous cycle.