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Credit Card Debt: 12 Common Debt Habits That Lead to Financial Ruin

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.
11/10/2014 12:40pm ET | Updated December 6, 2017
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The average U.S. 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. It's 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 don't decline.

Break free: Quit moving balances! Unless you get a great APR, one that's less than 15 percent, there's no point in moving balances. It's 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 that's it. You don't have to buy her an expensive gift that she may not want. If you're creative, you can make your mom a gift.

Break free: Don't justify your purchases. Tell the people in your life that you're 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 can't understand that you're trying to get your finances in order, may be they don't 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 won't 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 don't 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?" You'll most likely discover you don't need another (fill in the blank) that will take up space and collect dust.

6. You Say It's the Last Time

"This is the last time I'm using my credit card." Does this sound familiar? You may have good intentions. But when you're 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 I'm buying something with a credit card," mean it! If you think you'll 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 can't 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 can't afford something, right now, don't buy it. Besides, do you want to dress like everyone else? Cultivate your own lifestyle.

8. You Don't Have a Budget

Did you learn how to create a budget? If not, don't 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 you'll 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 you'll no longer have your credit cards, and if they're maxed out, they wouldn't 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 you're denied. If you're 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 Don't Know How To Manage Your Money

Who taught you money management skills? Was it your parents? Teachers? Grandparents? If you didn't learn money management skills as a child, you can learn them as an adult. It's okay to have credit cards as long as you don't abuse them.

Break free: If you want to buy something, but you're not 100 percent sure you want or need it, don't 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 can't buy food or pay their rent -- they too have credit card debt. You're not helping your kids by bailing them out every month. And you don't 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 can't help them anymore. Offer to help them get financial counseling. If they get mad or refuse to get help, it's their choice. Don't take it personally.

You Can Avoid a Credit Card Meltdown

Credit card debt plagues the U.S. If you're 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. It's not too late to kick the 12 common debt habits. Your financial future, after all, is in your hands.

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