5 credit card behaviors that could lead to big financial trouble right now

In today’s tough economic landscape, Americans are leaning on their credit cards more than ever before. Case in point: the total amount of credit card debt nationwide reached a staggering record of over $1.21 trillion in the fourth quarter of 2024, according to the latest Federal Reserve data. This represents a significant increase in card debt over the last few years, reflecting the financial pressure many households have been facing.

What makes this amount of debt particularly concerning is today’s punishing interest rate environment. The average credit card interest rate now hovers around 22% for accounts assessed interest. And, card rates that high (or higher) create a perfect storm for cardholders who are already struggling to make ends meet, with the compounding nature of credit card interest making it even tougher to find a way out. 

Perhaps most alarming, though, is the recent rise in credit card delinquencies. Nearly 10% of credit card account payments are delinquent, suggesting that many Americans are finding it increasingly difficult to keep up with even the minimum payments as their debt loads grow. But what types of credit card habits are leading to these issues right now and how can they be avoided? That’s what we’ll explore below.

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5 credit card behaviors that could lead to big financial trouble right now

While credit cards can be valuable financial tools when used responsibly, certain behaviors can quickly lead to financial disaster, especially in today’s high interest rate environment. Here are a few particularly dangerous credit card habits you’ll want to avoid right now:

Making minimum-only payments

One of the most financially devastating credit card behaviors is consistently making only the minimum payments on your balance. But minimum-only payments are on the rise as cardholders struggle with the impacts of inflation, setting up a dangerous debt spiral that becomes increasingly difficult to escape.

Consistently paying only the minimum amount due on your credit card can lead to a prolonged debt cycle, in large part due to the compounding interest charges. With average card APRs as high as they are, the interest accumulates rapidly, making it challenging to reduce the principal balance. This practice can result in an extended duration of debt repayment.

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Using cards for everyday essentials without a plan

With food prices up significantly and inflation still running higher than the Federal Reserve’s target rate, many households have turned to plastic to bridge the gap. However, when these essential purchases accrue compound interest at 22%, everyday living costs become extraordinarily expensive, and the debt snowball grows rapidly. 

So, if you’re regularly charging groceries, gas and other necessities to your credit cards without the means to pay off those purchases each month, you’ve entered dangerous territory. This behavior signals that your expenses consistently exceed your income — a fundamental budgetary problem that credit cards temporarily mask but ultimately worsen. 

Ignoring interest rates and fees

Many people don’t know the interest rate on their credit cards — or they find out the hard way. But when average rates are this high, every percentage point matters. So, if you’re not actively tracking your APRs, you could be paying far more in interest than you need to.

Some cards even impose a penalty APR, which is a much higher rate that kicks in after a certain period without payment on the account. These rates can shoot up to nearly 30%, turning even small balances into a long-term burden. Plus, other common card-related fees, like annual fees, late payment charges and cash advance fees, can also quietly inflate your debt.

Opening multiple accounts at once

It can be tempting to open new cards for the rewards, a temporary 0% APR offer, or just to get more breathing room by having more credit available to you. But opening too many new accounts in a short window can hurt your credit score and also increase the temptation to spend more than you can realistically repay.

Part of the issue is that each application triggers a hard inquiry on your credit report, and multiple inquiries can signal financial stress to lenders. Plus, new cards often come with requirements that, if not met, can end up costing you more in the long run. So, try to avoid opening new cards just for the sake of having more credit, as more accounts often mean more risk.

Ignoring the early warning signs

Financial trouble rarely arrives without warning, especially when it comes to credit card debt, and if you’re ignoring the early signs, you could be setting yourself up for financial disaster. Some of the red flags that indicate you’re on a path to financial disaster include regularly exceeding 30% credit utilization on your credit card accounts, struggling to make more than minimum payments, using one card to pay another or feeling anxious about checking your accounts. Relying on credit card rewards to justify overspending is another big one to keep an eye out for.

The bottom line

Managing credit cards in today’s economic environment isn’t easy, but it’s more important than usual. With interest rates high and delinquencies on the rise, even small missteps can snowball into larger financial problems before you realize it. So, if you recognize any of these five behaviors in your habits, now’s the time to course-correct.

Start by paying more than the minimum, monitoring your balances and understanding your credit card terms. Cut back on using credit for everyday needs if you can, and be careful about how often you apply for new credit. A few mindful shifts today can help protect you from debt spirals tomorrow and keep your finances on solid ground.