3 Reasons to Use Your Credit Cards Less in 2022

It may be time to keep your credit cards tucked away and start paying in cash.

Charging expenses on a credit card can be a savvy financial move. Generally, credit cards reward you for the purchases you make via points or cash back. That's effectively free money for buying the things you were already planning to purchase.

But sometimes, it pays to lock your credit cards away in a safe place and stop using them -- or cut back on using them -- temporarily. If these situations apply to you, you may want to use your credit cards less frequently in 2022.

1. You already have a giant balance to pay off

There's nothing wrong with charging expenses on a credit card and paying them off every month. But if you're sitting on a giant pile of credit card debt, the last thing you want to do is add to it. And if that's the case, you may be better off relying more on cash in the next bunch of months, all the while working on paying down your existing balances.

The tricky thing about credit cards is that unless you go in and check your balance frequently, you can end up overspending. On the other hand, if you have to physically hand over cash for the purchases you're making, it may more easily signal your brain that you need to cut back on purchases -- at least until your next paycheck arrives.

2. The interest rates on your credit cards are high

Credit cards are notorious for charging high amounts of interest. If you generally end up carrying your balances forward from month to month, and you're also stuck with a bunch of credit cards whose interest rates are exorbitant, then that's reason enough to cut back on swiping this year and start relying more on cash instead.

3. You're trying to boost your credit score

The higher a balance you carry across all of your credit cards, the more credit score damage it has the potential to cause. A big factor that goes into calculating your credit score is your credit utilization ratio. That ratio measures the amount of available revolving credit you're using at once.

A ratio above 30% could drag your credit score down, making it harder to borrow money affordably when you need to. And so if you're looking to boost your credit score -- whether because it generally needs work or there's a specific loan you want to apply for this year -- then it could pay to cut back on credit card usage.

Imagine you have a total credit limit of $10,000 and you owe $3,000 on your various credit cards. That means you're already at 30% utilization, and going any higher could quickly drag your credit score down. That alone is a good reason to use your credit cards less frequently for the time being.

While credit cards are a useful financial tool, they can also open the door to extra spending, costly debt, and credit score damage. If these circumstances apply to you, it could pay to fall back on cash more this year -- and ramp up your credit card usage once your financial picture is looking a bit healthier.