Effective ways to chop up your credit card!
Your credit card has been swiped more times than you care to think about and the pounds are piling up on your card without you even realising? So who can blame you if your knee-jerk reaction to having spent way more than you’d planned is to cut the wretched thing in half?
But is that all you have to do or is there more to terminating your credit card arrangements?
Grabbing the scissors and snip-snapping may be wonderfully melodramatic but unless you advise the credit card provider about your action, as far as they are concerned you still have an ongoing credit relationship.
In the first instance you should phone the credit card company. Their phone number is usually on the back of the card (just piece it together again and you’ll be fine!). The lovely customer service person will then advise you that they require written notification. If, on the off chance a phone call is sufficient, make sure you record in your diary the date and time of the conversation and the name of the person with whom you were speaking. That way there can be no argument that the conversation took place. And if they request a written cancellation, take a photocopy of your letter.
Of course, if you still have money owing on the credit card you will have to settle the account before your contract with the provider can be terminated. If the debt is considerable and you cannot pay it all off at once you may consider a number of different options to just paying it off monthly when your credit card bill comes in. By choosing an alternative, you will at least be divorcing yourself from your card-toting habits.
One possibility is to roll the debt over into a personal loan. Natwest, for instance, says an unsecured personal loan of between £500 and £25,000 will attract an interest rate of around 6.9% percent for one year compared with, say, its Natwest Gold card which charges a much higher 19 percent. Of course, there may be fees and charges involved in setting up a personal loan which might offset to some degree the lower interest rate.
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If the debt appears insurmountable, consider talking to the credit help-line in your area. They will be able to help you to consolidate all your outstanding debts and find ways for you to repay the money in the most practical way for you.
But even if you go through all these measures, there’s no guarantee that the credit card provider won’t approach you at some future date offering a new card and extended credit. And there’s no guarantee that six months down the track when you have maybe cleared your debt that you won’t be tempted again to take out a credit card.
After all, there are many purchases you make in life these days over the phone for which you need a credit card to complete the transaction.
I view credit cards as a necessary convenience of modern life. I use them instead of cash and I love the fact I can track my purchases. That way it’s like buying everything twice. Once at the cashier and then again once the statement comes. If I am undisciplined I get the reminder of my indiscretion again.
The one final suggestion I will make is that if you don’t want to chop it but you do want to stop using it, simply wet the card under a tap then place it on the back of your freezer wall. It will stick and freeze to the wall making it very hard to spontaneously use the card. Trust me, you will have to defrost the fridge. I have had investors simply place it in a glass of water in the freezer but that is too easy to take the card out and defrost it. That’s why we use the wall of the freezer.
Another idea is to give it to someone you trust with strict instructions under when you can use it. Allow them to be the devils advocate as to whether you can use the card but remember you need to set the boundaries upfront.
Live with passion,
Brett Wood
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