I see this all the time in my practice. Clients come to me with some credit card debt. Usually, it is spread over more than one credit card and sometimes it is just one. They want to pay their credit cards down. Great, I say, and we figure out how much they can squeeze out each month to pay down their balances.

Then, they say they still use the card with the balance for their daily credit card. They ask if that’s bad. YES, it is a bad idea. Here’s why:

1. You could be adding to the balance because you have to charge “stuff that happens” like car repairs and root canals. If you do not have a RAINY DAY SAVINGS account for Stuff that Happens, paying down your credit card becomes two steps forward and three steps back because you pay $300/month, but had to charge $450 for the brake job.
2. You charge everyday expenses and you don’t know how much you charged. Are paying extra towards the revolving balance or just paying the current purchase or not even paying the current purchase and thus adding to your revolving balance?
3. Psychologically, it’s probably causing you stress just seeing that card in your wallet without a plan to really pay it down. Maybe you either just throw up your hands and say, “whatever, let’s buy it” or never buy things you really need. Either is bad.

What should you be doing if you have credit card debt you want to pay down:

1. Make sure you are spending less than you earn each month. Know how much you have extra each month to put towards credit card pay down. Try to make it the same amount each month.
2. Have $3k ($1500 if you rent) of savings for RAINY DAY expenses. If you don’t, save for it BEFORE YOU TRY TO PAY YOUR CREDIT CARDS DOWN. Without the RAINY DAY fund, you will only amass more credit card debt with your first brake job or root canal.
3. Have a DIFFERENT credit card (or ONLY use your debit card) for every day use. Take the card with the balance and stick it in your drawer. Figure out what you can pay on it each month and just start throwing payments at it. No more purchases.

Sometimes it is a good idea to get a zero percent card and transfer the revolving balance to a 0% card AS LONG AS YOU CAN PAY THE BALANCE BY THE TIME THE 0% PROMO ENDS. If not, just get another card or use your debit card for daily purchases. If you get another card, YOU MUST make sure you are spending less than you earn each month and pay that new card in full each month. Let me repeat: pay the new card in full each month. If you don’t do that, this whole strategy falls apart.

This recommendation of getting a new card is not license to spend more. That’s the issue in the first place. For many, credit card debt is unavoidable (e.g. medical, repair bills, etc.), but for most, it is the result of not cutting spending when necessary and THEN being hit by a medical or repair bill.

First things first: cut spending, then get a card that you can use daily and pay it off each month. Hammer away at your revolving debt by KNOWING how much extra you can send to it each month and try to make that amount consistent. It’s not easy, and it’s not fun, but it will relieve stress, and that’s pretty good, too.