Are Your Credit Cards Serving as a Financial Crutch?

by Ryan Yates

This guest post was written by Go Banking Rates, bringing you informative personal finance content and helpful tools, as well as the best interest rates on financial services nationwide. Follow them on Twitter at @gobankingrates.

Relying on credit has become the norm for many Americans. Whether taking on a giant mortgage loan, financing a new car every year or jumping on every credit card offer in the mail, the consumerist way of life in the past few decades has been all about spending money we don’t have.

According to data from the Federal Reserve, about 43 percent of U.S. families spend more than they earn (Jeff’s note: been there and even financed the T-shirt), which means most don’t see their income as a spending cap. If you fall into this percentage, it’s time to get a grip on your spending, create a balanced approach to your credit card use and rid yourself of excessive debt once and for all.

The U.S. Credit Addiction

Consumers in the United States have been charged and found guilty of having a serious credit addiction. According to stats from, household credit card debt now averages more than $7,300, while the Federal Reserve has determined revolving debt for the nation (which includes credit cards) totals $874 billion in 2010.

There’s no doubt that as a nation, we have grown accustomed to living off of plastic. In many ways, however, it’s not our fault. Not only have we been encouraged for years to take advantage of great credit card offers, we’ve also been told that without credit cards, our credit reports and scores will suffer.

With all of the encouragement to take on multiple forms of credit, any discussion regarding how to use that credit in a well-balanced fashion has faded into the background.

In fact, it wasn’t until the housing market crumbled, followed by a tough recession and failure of hundreds of banks that creditors stopped being so generous, leaving consumers with the realization that they didn’t have as much money as they thought.

Can You Live Without Your Credit Cards?

As a result of creditors becoming choosier with who they issued credit cards, many Americans have been forced to live without this crutch. This means instead of spending approximately $1.22 for every dollar earned (according to, we are now limited to spending whatever is in our bank account.

If your credit card options were are not as limited as others’, you may have poor financial practices that make it difficult to live without your card. Here are a few signs:

  • Your credit utilization ratio is greater than 30 percent.
  • You have more credit cards than loans or other credit accounts.
  • You pay only the minimum balances on your cards.
  • You use your credit cards to pay for regular expenses (food, gas, car/insurance payments, rent other monthly bills).
  • You use credit cards to manage other debt.

Most importantly, if the thought of letting go of your credit cards and only spending your earned income leaves you fearful, you may be relying on them too heavily.

Reducing Your Credit Card Use

If you realize that you are too reliant on your credit cards and need to let some go then taking the appropriate steps is crucial. Here are some ways that you could wean yourself off of the plastic and finally get your debt in order.

  • Create a budget: A first great step to reducing credit card use is to create a budget. Doing so could not only help you determine your monthly income and expenditures, but also help you eliminate any unnecessary expenses. The hopeful end result would be learning you don’t need your credit cards for regular expenses and that some of your income could actually be used for paying your card debt down.
  • Reduce your debt: After making a budget, your next step should be to create a plan that addresses debt reduction. If you have old bills you haven’t paid, use your income to pay them down. If you don’t think you can do it on your own, there is plenty of debt help available, including debt consolidation, debt management services and credit counseling.
  • Manage your remaining credit: After you’ve paid down your debt, keep two or three of your credit cards with the longest histories, cancel the rest and manage a reasonable credit utilization ratio.

Credit cards are meant to be used as a financial tool, not a crutch to lean on. The sooner you address your card-reliance issues, the sooner you can solve the problem and become financially independent.

Two more source for credit score info: Credit Scores and Credit Reports and 5 Ways to Improve Your Credit Score Fast – Improve Your Credit Score


Little House September 23, 2010 at

These are all good points. I was lucky, in some sense, that during the housing boom I was already in the stages of repairing my credit from years prior, leaving me very little access to credit. Now that I’m nearing the finish line, I’ve established good credit and only use my cards sparingly, making sure to pay them in full each month.

Jeffrey Kosola September 24, 2010 at

@Little House I’m glad you are nearing the finish. When you get there, I will give you a big blogging high five. Having good credit is a good thing as long as you are not carrying a debt load to get it. Your approach is perfect.

Brandon August 3, 2012 at

It is scary how easily you can fall back on your credit cards for hard times… which in turn will create even more problems for you. When applying for credit cards online, you must be smart and choose the card that fits your lifestyle and needs best.

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