5 Habits Keeping You in Credit Card Debt

If you make the right money, you can crawl out of credit card debt faster and avoid taking on more.

Key point

  • Unfortunately, many consumers develop credit card spending and payment habits that get them into financial trouble.
  • If you only pay the minimum amount due, make late payments, or continue to use your credit card despite having debt, you may make it more difficult to get out of debt.

Credit card debt is a problem for many consumers in the United States. This type of high-interest debt can add up quickly. If you are struggling to pay off your credit card debt, know that you are not alone. But you may be able to change some of these habits to pay off debt faster.

1. Not prioritizing debt with the highest interest

When you have high-interest debt, such as credit card debt, following the debt avalanche method can be beneficial. With this method of paying off debt, you’ll first focus on paying off the debt with the highest interest rate and then putting as much extra money into it as possible to pay it off faster. Doing this will save you money on interest. When following this strategy, make sure you continue to make payments on your other cards. Skipping payments is not a good idea.

2. Make late payments

When you miss a payment in full or are late on a credit card bill, your card issuer will charge you a late fee. These fees can be expensive and add to your existing balance. In addition, unpaid debts will be subject to interest charges. It’s best to pay your credit card bills (and other bills) on time if you want to get out of debt more quickly.

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Another reason this is a good money transfer is because your payment history is the most significant factor in determining your credit score — it makes up 35% of your score. By paying your bills on time, you can work to improve your credit score and avoid negative marks on your credit report.

3. Pay only the minimum amount due

If you use a credit card and don’t pay the entire balance each month, your card issuer will charge you interest. Credit card interest rates can be high, making these fees expensive. Instead of paying only the minimum amount due, you should aim to pay off your entire balance each month. If you never carry a balance, you will not be charged interest.

4. Spending more than you can afford

When you use a credit card, you borrow money to pay for purchases and must pay your debt back. For many consumers, it is tempting to spend beyond their means and this is a harmful habit. If you want to get out of debt and stay out, be sure to consider your financial situation before charging your card. Using a budgeting app to set a budget can help you gain better control over your finances.

5. Continue to use a credit card when you have unpaid debts

If you already have credit card debt, you should stop using your credit card. You will add to your existing credit card balance by continuing to charge your card. The more you ignore debt, the faster credit card interest charges accumulate. If you’re struggling with overspending, you may want to hide your credit card for now.

Credit card debt doesn’t have to be forever

While debt can be scary and stressful, it is possible to get out of credit card debt. The first step is to find out how much debt you have, and then you can make a plan. A popular way to deal with debt is to transfer your existing credit card debt to a balance transfer card to take advantage of the 0% APR interest rate promotion when you pay off the balance. Check out the best balance transfer credit cards to learn more.

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