According to the Federal Reserve Bank of New York, since the inflation surge that began in mid-2021, the prices of consumer goods and services have skyrocketed, leading people to rack up a record amount of credit card debt—surpassing $1 trillion by the end of 2023.

While the soaring costs of food, energy, and housing are major contributors to consumer debt, poor credit card spending habits cannot be ignored.

Taking control of how you use your credit cards is the first step to getting out of debt. Here are 11 credit card habits you need to break immediately to take control of your financial situation.

1. Carrying a Revolving Balance

Having a revolving balance on your credit card makes every purchase more expensive due to interest charges. As the balance grows, interest charges accumulate, taking a significant cut from every payment you make toward your account. Paying any interest on your credit card account also negates any rewards earned, as the cost of interest far outweighs the cashback, points, or miles you might earn from purchases.

Break this habit by treating your credit card like a debit card, only charging what you can afford to pay off in full. Checking your balance monthly is also a good idea, so you know when to cut back on spending.

2. Relying on Credit for Living Expenses

A recent survey by LendingTree found that 64% of Americans are living paycheck to paycheck, many of whom rely on credit cards for their living expenses. While using credit cards for bills and other monthly expenses may seem like your only option when cash is tight, creating a budget can help get your finances back on track.

Start by making a detailed spending plan that includes savings and debt repayment. Review your bills for possible savings, start meal planning to reduce grocery expenses, and track every purchase to ensure your money is going where it needs to, so you can stick to your budget. Use budgeting apps like YNAB or PocketGuard to help organize your expenses, and services like Trim to identify and cancel unused subscriptions.

3. Maintaining High Balances

Exceeding your credit limit can lower your credit score. While the 2009 Credit Card Act prohibits issuers from allowing accounts to exceed their set limits to avoid over-limit fees, carrying high balances can still have other negative consequences, such as reducing your credit score.

4. Only Making Minimum Payments

Paying only the minimum payment each month traps you in a cycle of debt that becomes increasingly difficult to escape. As your balance and interest charges grow, you end up spending a significant amount of money to pay off the original charge.

For example, if you have a $5,000creditcardbalancewithanaverageinterestrateof20.74$100 per month, it’s estimated you’ll need 117 months (nearly 10 years!) to clear the entire balance. You’ll also pay $6,650ininterestontopoftheoriginalpurchasecosts,totaling$11,650 spent over this period.

Use a credit card repayment calculator to better understand your situation and take steps to pay off the balance faster, aiming to pay at least two to three times the minimum payment each month. Better yet, consider using a balance transfer card to ease the pressure of these growing monthly charges.

5. Missing Payments

Keep a close eye on bill due dates to avoid late fees and other potential penalties. Those who miss payment deadlines face late fees of up to $41 and will start accruing interest on charges made during that billing cycle. Missing payments for 60 days or more can lead to penalty rates, making your balance even harder to pay off and potentially trapping you in a vicious cycle of debt.

If you’re struggling to pay your credit card bill, don’t ignore it. Call your issuer to arrange a payment plan to avoid fees and penalties. Alternatively, setting up bill reminders and automatic payments is a simple way to avoid these potential charges.

6. Using Multiple Credit Cards

The more credit cards you have, the easier it is to lose track of total spending and accumulate balances across multiple accounts, leading to significant debt. It’s better to stick to using one credit card so you can closely monitor spending and ensure you don’t go over budget. This also allows you to maximize rewards, earning more cashback, miles, or points on everyday purchases and monthly expenses.

7. Chasing Rewards

Spending more money to earn rewards can end up costing more than the rewards you get from the issuer in the long run. Use credit cards only for well-planned purchases and utilize other tools to increase cashback or other rewards income.

In fact, you can use various cashback tools in conjunction with your credit card to boost rewards. For instance, download the Fetch app, and simply upload pictures of your receipts to your account to earn cashback on grocery, gas, and other purchases. You’ll earn points redeemable for free gift cards at various stores like Amazon, Target, and Walmart. Check their special offers section to see which stores and brands can give you more points to earn rewards faster.

8. Ignoring Reward Offers

Many rewards credit cards offer monthly potential for reward earnings with specific retailers and businesses. These promotional offers allow you to earn more cashback, miles, or points when shopping at these companies, but you won’t automatically receive the extra benefits.

Such offers are typically sent to you by your credit card company via email and require you to log into your account and opt-in to earn additional rewards. Ignoring these promotional offers could mean missing out on extra rewards for purchases or travel bookings.

9. Impulse Spending

According to Slickdeals’ Impulse Spending Report, the average consumer spends just over $150permonthonimpulsepurchases.Whilespending$5 here and $10 there might seem harmless, these small expenses quickly snowball, leading to an inability to pay off your debt by the due date. Tracking every purchase and following a well-crafted budget is key to avoiding debt.

10. Opening Store Cards for Discounts

Retailers attract shoppers to open store credit cards by offering instant discounts of 10% to 20% upon approval. While the extra savings are tempting, opening a new credit card for a discount is unwise for several reasons.

First, every application for new credit can potentially lower your credit score, jeopardizing current loan applications. Second, most store cards come with lower credit limits, higher interest charges, and limited reward earning and redemption options, making them a poor choice for most shoppers.

Ultimately, you’re better off using a general cashback credit card for payments, as it offers more flexible redemption options. This doesn’t mean you have to give up on savings. Instead, look for coupons online or through mobile coupon apps like Coupon Cabin, which send in-store offers directly to your phone, allowing you to scan them at checkout for immediate savings.

11. Ignoring Savings While Paying Off Debt

A common mistake people make while trying to get out of debt is using all available funds to pay off debts. However, neglecting the need for savings can backfire, leading to more debt in the future. While it’s important to work on paying off high-interest debt, it’s equally important to build savings for emergencies.

An emergency fund provides you with a cash buffer to rely on during tough economic times or when unexpected bills arise, protecting your financial health. Having liquid cash ensures you can pay bills without resorting to high-interest credit cards and falling deeper into debt. Aim to save up to three months of living expenses in a separate account, out of sight and out of mind.

Where you keep your savings also matters, and you can earn over 5% interest through High-Yield Online Savings Accounts (HYSA). For example, Bread Savings currently offers a competitive 5.15% Annual Percentage Yield (APY) rate with only a $100 minimum to open an account.

Interest is compounded daily and credited to your account at the end of the month, allowing your money to earn more for you. In contrast, traditional brick-and-mortar banks pay an average annual rate of 0.46%.