Common Reasons Why Individuals Fall Into Credit Card Debt

Many people discover the hard way that credit card debt is easy to get into and hard to get out of. It may seem like a convenience to pay for purchases with a credit card and worry about the payments later, but that approach can lead to financial hardship in a hurry. If you’re facing credit card debt, it’s important to talk to your credit union and make a manageable plan for repayment. Here are some of the ways people go wrong with plastic:

Debt

Not Paying in Full Each Month
If you carry a monthly balance on your  credit card , chances are you’re charging too much money. Although in some cases credit cards can be used to finance large purchases, like furniture, most people should be paying off their cards each month. A large component of your credit score is your debt-to-credit ratio—how much debt you carry on a credit card versus your credit limit. The closer to maxed out the card is, the worse the impact on your credit score. Financial experts believe that a high debt-to-credit ratio is a sign that a person is living beyond their means.

Spending on the Wrong Things
Credit cards are best used for needs, not wants. People who struggle with credit card debt often use their cards for expensive meals and shopping expeditions, not necessary purchases, like car repairs. Seeing credit as a way to afford things you don’t have money for in your checking account is an easy way to slide into debt.

Paying Bills Late
Late fees on credit cards can add up in a hurry. The same goes for over-the-limit fees. If you pay late or go over your limit, your interest rate could also skyrocket. Your debt could increase by hundreds of dollars with just a few missteps.

At GCS Credit Union, we’re here to help you make smart decisions about managing your money. Talk to one of our credit union experts if you’re struggling with debt. We offer  checking accounts , debit cards, and much more to help you take control financially. Find out more about our services by calling our O’Fallon branch at (618) 797-7993.   

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