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According to the Federal Reserve, 7 out of 10 Americans own at least one credit card. Using census data, approximately 170 million Americans are using credit. This means we are reaching enormous levels of consumer lending. The Federal Reserve website shows 3,800 billion dollars of consumer credit outstanding.  These levels are near those present before the 2008 financial crisis. The natural question is, should we be worried?

Freedom Debt Relief will be the first one to tell you about the dangers of irresponsible credit card spending. Credit card debt can ruin your credit score which, in turn, affects your ability to rent an apartment, get a loan or even land a job. Things can easily spiral from there because a bad credit score means higher interest rate on new loans. However, when handled responsibly credit cards are a convenient and beneficial method of payment.

After the crisis in 2008, consumers become wary of credit card lending. While increases in consumer lending has its risks, it’s not necessarily worrisome. The most important factor to consider is how Americans are handing their credit. With the average credit score on the rise, it appears more consumers are staying within their budget and paying bills on time. Delinquencies have gone up too, but this is to be expected with easier access to credit.

Freedom Debt Relief wants you to be educated on how to handle credit cards.

Rising Interest Rates

Freedom Debt Relief reminds consumers to be aware of what is going on in the economy. After keeping interest rates near zero since the 2008 crash, the Federal Reserve has announced that interest rates will rise this year. Consumers with a balance on their credit card will face increased payments. Even a small rise in interest rates can add up to a lot of money. Paying off your credit card debt as soon as possible could save you from paying more in the long run.

Know your Habits

Freedom Debt Relief knows owning multiple credit cards could be a slippery slope. Some consumers tend to use their cards freely and are horrified when the bill arrives. Spending large amounts and not paying bills on time negatively affects your credit score. If this sounds like you, cut down your credit cards to one and carefully manage your spending. Each additional credit card in your wallet is an extra responsibility (and potential expense) that you must track.

Pay Off Your Credit Card Bill

Paying your credit card bill in full and on time is extremely important. At Freedom Debt Relief, we see well-intentioned consumers every day whose debt has spiraled out of control. Credit cards come with extremely high interest rates. If bills aren’t paid on time you will have to pay back much more than you spent. Make sure you do not charge more to the card than you can pay in full and on time every month. Be aware of your monthly cash flow and keep the amount below what you can afford in case an emergency arises.

My Say

With plastic swiping all over the place, it is easy to get carried away. Carefully manage your credit card and you could reap the benefits.

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A freelance researcher-writer who has continuously been in such field for more than 10 years. Know more about her here.

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