Fergus Federal Credit Union

The Hazards of Relying on Credit Cards

by Laura Varela / October 4th, 2019


Credit cards are a great convenience, there’s no doubt about it. They reduce the need to carry cash, you can use them to pay for an unexpected expense, and they help you build a credit history when you’re trying to get a loan. But when you don’t pay your balance in full each month, credit card interest rates can quickly sink you into deeper debt.

The Federal Reserve Bank of New York published a report in early 2019 which showed that credit card debt in the U.S. rose to $870 billion, touching the 2008 peak during the Great Recession. Today, 55% of U.S. adults carry credit card debt month-to-month instead of paying off their balances.

Sometimes carrying over a balance is unavoidable. Maybe you’re hit with a medical expense your insurance doesn’t cover or your car’s transmission fails and you need a new one. If you pay off that balance over a few months, you should be fine.

However, trouble begins when you start using credit cards to maintain a lifestyle that doesn’t match your income. One of the basic rules of personal finance is “don’t spend more than you make.” When you break that rule, you set off circumstances that can grow into bigger and bigger problems.

Are you heading into troubled waters? The National Foundation of Credit Counseling says if you have any of the following problems, it’s time to make a course correction:

If one or more of these issues apply to you, consider making any of the following changes now before your financial situation becomes unmanageable:

If you need help finding ways to free up money and reduce your spending, check out the numerous articles on this site about saving and money management.

 



NCUA Equal Housing Lender
Printed Friday, September 25, 2020

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