Is 2021 the Year to Cut Up Your Credit Cards?

Credit cards are a useful tool, but they're not right for everyone. Here's how to know if it's time to ditch yours.

There are several benefits you might reap if you use credit cards on a regular basis. For one thing, credit cards make shopping easy and convenient. You don't need to worry about carrying cash, and you can store your card details on your phone or laptop to make online purchases a snap.

Credit cards also offer you the potential to earn financial rewards for the purchases you're already making. If you normally fill up your car twice a week and hit the grocery store every five or six days, you might earn extra cash back on those purchases that's yours to spend as you please.

But while credit cards are certainly useful, they can also lead to less-than-ideal financial decisions. If the following points apply to you, then this may be the year to stop using credit cards.

1. You never manage to pay off your monthly bills in full

Credit card companies make money when consumers charge expenses and then don't pay for them in full by the time their bills come due. If you find that you consistently can't pay off your credit card bill month after month, and that your balance only gets larger and larger, then it may be time to say goodbye to your credit cards for the time being.

Carrying too large a balance can have damaging consequences. It can cause you to spend a lot of money on interest (money you could otherwise use for important things, like paying for essentials), and it can damage your credit score.

It's one thing if you can't pay your credit card bill in full from time to time. But if you establish a consistent pattern of falling short, think about tossing those cards sooner rather than later.

2. You routinely shop out of boredom

Some people only go shopping when they need a specific item. But if you have a tendency to shop when you're bored, then your credit cards could lead to overspending. If that's the case, you may be better off getting rid of them so they don't damage your finances on a long-term basis.

3. You have a difficult time with self-control at the store

When you make a shopping list before hitting the store and bring only enough cash to cover the items you need, you eliminate the possibility of overspending. Now, if you usually exercise a decent amount of self-control when shopping, then it may not be necessary to ditch your cards. But if you overspend pretty much every time you're at the store, and your credit cards are giving you the flexibility to spend more, then it may be time to dump them.

There's no reason to cut up your credit cards if you mostly stick to a budget and pay your bill on time. But if the above items apply to you, then it could be time to say goodbye to those cards until you can pay off your debt and work on the habits that frequently cause you to overspend.

You may decide to get rid of your credit cards this year and clean up your finances in the process. But once you get to a better place, you may decide to start using credit cards again, and that's okay.

In fact, rather than cut up your credit cards, a better bet may be to tuck them away in a safe place that's also not so easy to access (perhaps a safe-deposit box at your bank). That way, you won't be tempted to use them in the near term, but they'll be there for you once you're ready to go back to them.