Suze Orman Says to Do This First if You're in Credit Card Trouble

Could this be the secret to getting out of credit card debt for good?

Owing money on credit cards can be very stressful -- and very expensive. Credit cards have high interest rates, which can mean that most of your monthly payment goes toward paying financing charges and your principal balance falls slowly. 

The good news is, you have options to try to dig yourself out of debt if you have racked up a balance on your cards. 

Finance expert Suze Orman has some tips for doing so, including providing insight into the first thing you should do if you're in trouble with your credit cards.  

Here's what Suze Orman says to do when you have a lot of credit card debt

According to Orman, there's one step you need to take first if you are having a hard time managing and repaying your credit cards. 

"If you are in credit card trouble, you must cut up all of your credit cards now, with the possible exception of one card for emergencies; do not carry this card in your wallet, however," Orman advised on her blog. 

Orman has made this suggestion to urge people to stop digging their way into a deeper hole once they've already amassed a credit card balance they can't pay off in full. If you want to pay off your bills, become free of credit card debt, and stop enriching your creditors with high interest charges, you can't keep making your situation worse. If you keep charging stuff on your cards, your balance will grow even as you make payments -- and the interest will keep accruing and making every purchase more expensive.

After you've stopped using your cards, Orman has some other advice including making more than the minimum payment each month and focusing on repaying debt with the highest interest rate first. But these additional steps will work only if you aren't continuing to charge on your cards. Otherwise, any progress you make will be undone. 

Should you listen to Orman and follow this advice?

Using credit cards can be a good way to earn rewards for everyday spending -- and credit cards can help you build credit. That's why it doesn't make sense for most people to swear off card use entirely, even though some experts such as Dave Ramsey recommend doing just that.

But, in this case, Orman is specifically speaking to people who are in trouble with their credit cards and trying to get out of debt. And in this situation, she's likely correct that you want to put a moratorium on charging things until your debt balance is paid in full. 

Once you've paid your cards down to $0, you can consider whether you are ready to begin using credit responsibly and using it as a tool to help improve your financial situation. This could be a good option if you have been able to stick to a budget and you're confident you can use your cards only to pay for things you can afford to repay in full when your statement balance comes. 

But until you've eliminated the balance you are paying interest on, and committed to not running up your cards again, avoiding the temptation of charging more items is probably your best move.