Credit card debt can be exhausting. It can feel like a treadmill. You are moving. You are making payments every month. You are likely sweating over it. You are actively working at getting to your goal. And yet the scenery never changes and as much as you think you should be making progress, you still find yourself in the same place.
You are right to be getting tired and frustrated. The numbers aren’t adding up the way they should be given your effort. But you have some credit card habits that are taking a bigger toll on you than you realize. Many of them may be things you perceive as ways to just get by with what life costs, or solutions to getting to the next paycheck. But the real cost may be a lot more amplified than normal, in part because of the debt you are already carrying.
Credit card interest typically compounds daily, not monthly once you are carrying a balance. So just like compounding can be magical to the upside when you are saving and investing, it can be toxic and soul crushing when it is working against you. That’s why these seemingly small habits can derail your best efforts to climb out of debt.
The Habits Holding You Back, Ranked
- Taking a cash advance. As much as I love the saying ‘cash is king’, a cash advance is trouble. It may seem less harmful than taking on more credit card debt, but it can add up a lot faster than people realize. First there is often an upfront fee that can be as high as 5 percent. Next, you will likely be paying a high interest rate just like a credit card. But there’s more: unlike credit cards if you don’t have debt on them when you make the purchase, cash advances start charging interest right away. There is no grace period. Interest starts adding up immediately as soon as the cash is in your account. That is expensive.
- Paying only the minimum on your credit card every month. Don’t get me wrong: paying on time, even if it is just the minimum is essential to keep your credit score intact. What surprises me here is that many new credit card holders, including young people, aka emerging financial grownups that I hear from, confidently tell me that is what is “due”, and pay only the minimum without knowing the true cost. Real financial grownups know that the minimum will barely cover the interest on the credit card. There is no material progress on the credit card balance. So the balance grows, even though you are paying on time.
- Paying a higher APR because of a penalty or your credit score. Refer back to #2. Paying on time is everything. If you pay late, it hurts your credit. If your credit goes down, your interest rate often goes up. This is where it can pay off to be pro-active. Be prepared and polite and get in touch with your credit card issuer. The higher rate can be adjusted downward but you may have to ask and it may take time.
- Not hitting pause on new charges. Continuing to charge new purchases while carrying a balance is going to cost you big time. If you aren’t carrying a balance, when you charge something, you don’t start paying interest until after the bill is due and not paid in full. However, if there is an ongoing balance, the interest kicks in the minute that charge hits. The interest starts accruing immediately instead of the usual 21 day interest free days you get when you aren’t carrying a balance.
- Using one credit card to pay another, and on repeat. Unless you are doing a clean balance transfer with a 0 percent promotional window and a real structured payoff plan, it can cost you more than you may realize. There are almost always fees attached, and it isn’t doing anything to reduce the balance. It may feel as though you cleared the deck, but really you have just shifted the burden, and paid to do so.
- Letting rewards and sign up bonuses influence decisions. Cash back feels like free money, and points can make you feel like you are achieving something. In some sense you are: you may be getting better seats on an airplane or lounge access when you travel. But sadly, these rewards are far from free. Paying interest at typical credit cards rates is far more expensive than any perk you are getting. Think about the math: carrying a balance at 24% so you can get a generous 3 percent cash back will never add up.
- Paying attention to the wrong numbers. The total balance may feel overwhelming. Naturally, it makes sense to gravitate towards the more manageable number: the minimum balance. When you focus on the minimum amount due, you tend to lose sight of the more critical numbers: the total amount due, the APR and interest rate, as well as how much of the payment you are making is actually going towards the principal and freeing you from the debt.
The Worst Credit Card Habit of All: Staying Silent About Your Debt
If you recognize any of these habits in yourself, or in someone you care about, you are not alone. It can feel lonely but in fact these habits are more common than we realize and a lot less. Keeping it quiet and under the radar is perhaps the worst habit of all. Even if you do the math and understand what is going on in terms of the numbers, credit card debt is often tied to behaviour and habits that have been part of our life for a long time, including keeping it secret. It is a very normal instinct as we try to get through our daily lives to simply reach for our credit card to pay for things instead of planning ahead and creating new systems.
Hitting pause and getting support can help cut through the chaos of daily life. Judgement-free conversations and working through options with a specialist at Accredited Debt Relief is a way to get started. They can help you develop a reset plan that puts you in control before the interest adds up any further.
FAQ’s about Credit Card Debt Habits
Why did my interest go up even though I paid on time? A late payment, even from several months back, or an unrelated drop in your credit score, can trigger a higher APR as a penalty. That can stick around even if your payment history is back on track. It is worth calling your card issuer to ask about getting it adjusted back down. You have nothing to lose.
Does a cash advance hurt more than buying something? Yes. Cash advances often come with upfront fees of up to 5 percent. They also tend to have higher interest rates than a regular purchase. The real killer here is that there is no grace period so interest starts adding up the minute the cash hits your account.
What’s the absolute worst credit card habit when you’re trying to pay off debt? It’s not what you do or what you say, it is what you don’t do and what you don’t say. It’s staying quiet about it. Every habit on this list gets worse the longer it goes unaddressed, and silence is what lets a fixable problem quietly turn into an unmanageable one.
The information on this site is provided as a general resource and does not constitute legal, tax or financial advice. For guidance specific to your situation, we recommend consulting a qualified professional.