–– An increase in autopilot subscriptions: "Another contributor to debt in recent years are services and subscriptions that are on autopilot, that consumers either forget they have or have grown to neglect the cost of," said Lindsay Sakraida, director of content marketing with DealNews, a comparison shopping website. "Unlike normal recurring bills of this nature, like electricity or cable, they're very small in cost and consistent, so it's easy to overlook them and ignore how they contribute to overall bills."
To minimize credit card debt, limit the number of auto subscriptions on your credit cards, and periodically take stock of automatic monthly payments charged to your cards. You might be paying for services that you no longer need or use.
–– Living in a cashless society: A cashless society is convenient because you don't have to worry about lost or stolen money, or being caught in a situation where you don't have enough cash on hand for a purchase. But at the same time, this approach to spending makes it easier to disassociate the effect a purchase has on your financial stability, Sakraida said.
"When a credit card gives you the ability to buy almost anything, anytime, regardless of how much money is in your account, it becomes very easy to not even consider whether you should buy it," she said.
To get out of a habit of swiping your card for any and every purchase, carry a credit card only when you intend to make a purchase with the card, and don't wait for your statement to arrive to make a payment. If you charge an item to your credit card, immediately pay off the purchase to avoid debt and interest charges.
–– Getting sucked in by promotions: Credit card issuers know how to entice customers. Some credit cards offer 0 percent interest on balance transfers and purchases for a certain number of months, and other credit cards give sign-up bonuses when customers spend a certain amount within the first 90 days of opening an account.
But while these promotions are attractive, they can also encourage spending. Rather than get sucked into a promotion and spend unnecessarily, use a credit card only when you need something -- and when you can afford to pay it off.
––Lack of financial knowledge: If you don't know how to manage credit cards responsibly, there's also a risk of making mistakes with your credit card, like charging up your accounts and carrying high balances from month to month. You might assume that as long as you make your minimum payment every month, you're on the right track. But maxing out a credit card can lower your credit score.
Because the amount you owe typically makes up 30 percent of your credit score, maintaining good credit also involves minimizing revolving debt. As a rule of thumb, credit card balances should never exceed 30 percent of your credit limit.
Credit cards are convenient and flexible, but they can also get you into trouble if not used responsibly. Credit cards might be the preferred payment method for some Americans, but it doesn't have to be your preferred method. So learn how to manage cards the right way, and get out of the habit of carrying high balances from month to month.
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