The average US household credit card debt stands at $15,607, counting only those households carrying debt. In total, American consumers owe $880.5 billion in credit card debt according to nerdwallet.
How did this happen?
The reasons for credit card debt vary from person-to-person. But there are some common debt habits that can lead to credit card debt and cause it to grow instead of shrink. Likewise, there are ways you can break free from the clutches of credit card debt.
Read on to discover the 12 common debt habits that lead to financial ruin and how you can break free of credit card debt today.
12 Common Debt Habits and Ways to Break Free of Credit Card Spending
1. Your Parents Paid for Everything with Credit Cards
Did your parents buy things with credit cards? If so, you learned this bad money habit from them. Most parents parent based on how they were parented, so they may have learned to use credit cards from their parents. Its a vicious circle.
Break free: Stop being like your parents! Pay for items with cash or check.
2. You Move Balances from One Card to Another
Are you playing the Credit Card Shuffle game? You know. This is where you constantly move balances from one credit card to another, even though your balances dont decline.
Break free: Quit moving balances! Unless you get a great APR, one thats less than 15 percent, theres no point in moving balances. Its much better to pay off your balances.
3. You Justify Your Purchases
Do you tell yourself you have to use your credit card to purchase gifts for loved ones? You may want to get your mom a card and thats it. You dont have to buy her an expensive gift that she may not want. If youre creative, you can make your mom a gift.
Break free: Dont justify your purchases. Tell the people in your life that youre trying to gain control of your finances. You may not be able to exchange Christmas gifts. You may not be able to buy birthday gifts. If they cant understand that youre trying to get your finances in order, may be they dont deserve to be in your life.
4. You Refuse to Look at Your Credit Card Debt
Have you stuck your head in the sand like an ostrich? Refusing to look at your credit card debt wont make it go away.
Break free: Get all of your credit card bills and review your purchases and balances. Find out your annual APR and other fees. Create a spreadsheet and list your credit cards, include the names, balances and due dates. Looking at your debt gives you a better understanding of how much you owe. You can then create a plan to pay off your credit cards.
5. You Buy Things on Impulse
Do buy things on impulse? This is dangerous for a few reasons:
- You end up with stuff you dont want or need.
- You may discover you already have (fill in the blank).
- You increase your credit card balances.
Break free: Curb your impulses by asking yourself, Do I need this? Youll most likely discover you dont need another (fill in the blank) that will take up space and collect dust.
6. You Say Its the Last Time
This is the last time Im using my credit card. Does this sound familiar? You may have good intentions. But when youre faced with buying something, you reach for your credit card. It happens over and over again.
Break free: If you say, This is the last time Im buying something with a credit card, mean it! If you think youll be tempted to use your credit cards, leave them at home.
7. You Think You Need to Keep Up Appearances
Do you feel the need to keep up appearances? Buying clothing and accessories and cars that you cant afford, right now, gets you deeper into credit card debt. If your friends only like you because of what you wear or what car you drive, you may want to get new friends.
Break free: Let go of having the need for material things. If you cant afford something, right now, dont buy it. Besides, do you want to dress like everyone else? Cultivate your own lifestyle.
8. You Dont Have a Budget
Did you learn how to create a budget? If not, dont panic. Creating a budget is simple. List your monthly income (hopefully this is more than your expenses) in one column and your expenses in the other. If your income does not exceed your expenses, you may want to get a second job. You may also want to cut back on expenses.
Break free: Create a budget using a spreadsheet program or good ole paper and pen. Adjust your budget as your expenses decrease and income increases.
9. You Have a Fear of Carrying Cash
Do think youll be mugged if you carry cash? Some people have a fear of getting mugged, therefore, do not carry cash. However, if you were mugged, the robbers most likely would take your credit cards and use them. However, this may be a blessing in disguise. Why? Because youll no longer have your credit cards, and if theyre maxed out, they wouldnt be able to buy many items.
Break free: Carry cash with you instead of your credit cards. If you have an extreme fear of carrying cash, seek counseling and face your fear.
10. You Think Filing Bankruptcy Will Solve Your Problem
Have you thought about filing for bankruptcy? Years ago, many people filed bankruptcy as a way to clean up their credit and make a fresh start. Try to file bankruptcy today and you may be surprised that youre denied. If youre making a decent living, you have no excuse. All you need to do is cut your spending.
Break free: Before you file for bankruptcy, use your budget to create a plan to pay off your credit cards. If you earn a great living, pay $20 or $50 more on your credit card balances. Your balances will be $0 before you know it.
11. You Dont Know How To Manage Your Money
Who taught you money management skills? Was it your parents? Teachers? Grandparents? If you didnt learn money management skills as a child, you can learn them as an adult. Its okay to have credit cards as long as you dont abuse them.
Break free: If you want to buy something, but youre not 100 percent sure you want or need it, dont buy it. Also, save 10 percent or more of your income per month
12. You Pay the Bills of Others with Your Credit Cards
Does a family member or friend call you with a money sob story each month? Some parents have gone into credit card debt for their adult children. They feel bad if their kids cant buy food or pay their rent -- they too have credit card debt. Youre not helping your kids by bailing them out every month. And you dont help anyone by paying their bills with your credit cards. You only hurt yourself and your credit card score.
Break free: This may be a tough one, but the next time your adult children or friends ask you to pay for (fill in the blank) tell them you cant help them anymore. Offer to help them get financial counseling. If they get mad or refuse to get help, its their choice. Dont take it personally.
You Can Avoid a Credit Card Meltdown
Credit card debt plagues the US If youre in deep, get out now. Call your creditors and make payment arrangements. Some may offer to close your credit cards. However, it will be reported to the credit bureau and can ruin your financial history. Before you take this drastic approach, see if you can earn extra income each month. If you have to sell some items, do it. You may consider selling some investments. But speak with someone before you do. Its not too late to kick the 12 common debt habits. Your financial future, after all, is in your hands.
Consumer borrowing increased by $15.9 billion to approximately $3.28 trillion in September, according to the Federal Reserve's monthly report on auto and student loans and credit card debt.
Nonrevolving credit for auto and student loans increased by $14.5 billion to approximately $2.39 trillion in September, while revolving credit, which includes credit cards, increased from $880.3 billion to $881.8 billion.
The increase comes after a $201 million decline in revolving credit in August, according to Bloomberg. Non-revolving credit increased $14.2 billion in August compared to the $14.5 billion jump in September, according to the article.
Economists estimated that total consumer borrowing would increase between $12 billion to $22 billion, making the median of $16 billion close to the results for September, it notes.
The news of the increase in total consumer borrowing comes at the same time the US Bureau of Labor Statistics reported the addition of 214,000 jobs in October and a 5.8 percent reduction in the unemployment rate.
Since the beginning of the year, the unemployment rate and the number of unemployed persons have declined by 0.8 percent and 1.2 million, respectively, according to the bureau.
9 Consumer credit grew by $15.9 bil in Sept., about in line with the $16 bil consensus and up from $14 bil in Aug. Nonrevolving debt, which includes auto loans and student borrowing, expanded by $14.5 bil. But revolving credit, which includes credit cards, rose just $1.4 bil, an ominous sign for retailers hoping for greater consumer spending.
MONTERY COUNTY - Prosecutors have settled a consumer fraud case with Debt Free Associates, LLC and are asking eligible clients to seek the refunds they are owed, Monterey County District Attorney Dean Flippo said.
As part of the settlement, Debt Free Associates, a Southern California company that promised to reduce consumers credit card debt, sent refund offer letters to consumers who were victimized. Deputy District Attorney Dije Ndreu, who handled the settlement, wants consumers to know these letters are not fraudulent and that if eligible, they only have 60 days to request the refund.
Many victims paid thousands of dollars to the company yet did not have their debt reduced. Also, when consumers tried to cancel their agreements, only a small portion of their payments were reimbursed.
The settlement covers all eligible California consumers, not just those in Monterey County. Prosecutors with the Monterey and Contra Costa counties were able to find 35 Monterey County victims and 70 in Contra Costa County.