Credit Card Guilt

[Valerie S. Johnson]

By Valerie S. Johnson

So lie on the couch and tell me: how do you REALLY feel about your credit cards, those bits of plastic in your wallet? Love them or loathe them? Do you worry about how you’ll pay the balance or even the minimum payment due? Do you feel guilty when you sign your name or when you see the total balance on the statement?

Bankrate.com did some recent surveys about how Americans feel about their credit card debt. For many, it isn’t a pretty picture. One quarter of the respondents said they worry about how they are going to pay their bills each month. And slightly more said they felt guilty about how much they are charging.

On the other hand, half the respondents didn’t worry about repayment and didn’t feel guilty. Could it be because they are responsible credit card users – or is it because they are in denial that they have a debt problem?

More results from the Bankrate.com study are available here.

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This is how I'm feeling lately. I have a credit card that I really need to pay off and don't have enough in savings to do so. My guilt about the card has me thinking about closing out my IRA account knowing that I'll pay income tax and penalty on the early distribution (I'm not yet 59 1/2). Is that a wise decision? My credit card debt is $12,000 and I have just enough in the IRA to pay it off. Any one with any experience on this? Thanks.

[vsjhoc]

This is how I'm feeling lately. I have a credit card that I really need to pay off and don't have enough in savings to do so. My guilt about the card has me thinking about closing out my IRA account knowing that I'll pay income tax and penalty on the early distribution (I'm not yet 59 1/2). Is that a wise decision? My credit card debt is $12,000 and I have just enough in the IRA to pay it off. Any one with any experience on this? Thanks.

I think most people would advise against cleaning out your retirement fund because you can never make up for lost time and as you said, there may be tax ramifications. But if the guilt over the debt is eating you up, perhaps you should withdraw some or all of the IRA to pay it off.

There's no "correct" answer to this one; it just depends on your priorities.

Are there other sources of income you can tap to pay the debt? Second job? Sell stuff on eBay?

Thank you for your response. My company frowns on second jobs and I am trying to see what I may have around the house that I can sell and maybe have a yard sale. The IRA is not my only retirement account and I would really hate to have to pay the taxes and penalties. I just need to think it through some more, but appreciate the advice.

[wellheeled]

I wouldn't withdraw my IRA to pay off the debt - but perhaps you can hold off on additional contributions.

What I find helpful with credit cards is that I always know exactly how much I spent (thank you statements!) whereas with cash I really have no idea.

[Ima saver]

I enjoy my credit card. My husband puts a lot of his building materials on the card. I pay it off each month and it pays me back 1% in cash.

[jamai]

I enjoy my credit card. My husband puts a lot of his building materials on the card. I pay it off each month and it pays me back 1% in cash.

thats a good way to benefit from a credit card!

[jedi]

I always pay off my CC balance in full when the bill comes. Frankly, I can't live without my credit card.

It has helped me streamline my spending and I enjoy the convenience that comes with it. After every few years, I'll accumulate enough reward points for me to redeem bonus gifts.

[JimInOK]

What I find helpful with credit cards is that I always know exactly how much I spent (thank you statements!) whereas with cash I really have no idea.

I completely agree. We vacationed in WDW this summer. I wanted to have a very clear picture of exactly what we spent money on, by category, so I could use the data to help plan and save for future trips. The easiest way for me to do so was to put everything I possibly could (which is almost everything) on the credit card. Now, we had the money to pay it off saved up already or I'd never have done this (or even taken the trip).

I have a love/hate relationship with CC's. We thought we were doing great by paying off our CC's every time the statement arrived. What I found was that the amount due on each statement slowly grew higher every month. In essence, we were slowly borrowing more and more of next month's paycheck to spend this month. We finally took enough money out of savings to pay the card off and get us through a month entirely without CC's. Now, I keep a monthly budget and every charge is deducted from this month's available cash. I pay it off every month on the last business day of the month. I also find that I spend a lot less doing it this way. A potential purchase is no longer a charge that I can worry about next month; it's the same as cash out of my pocket today. And I almost always find I'd rather have the cash in my pocket than whatever I was thinking of buying.