A new study by the National Foundation for Credit Counseling revealed that consumers are very attached to their plastic. In fact, one in five respondents admit they would not be able to maintain their lifestyles without credit. Furthermore, about 22% said they would have to make significant lifestyle changes in order to be able to live on a cash basis.
NFCC spokesperson Gail Cunningham says this is a big problem. Not being able to maintain your standard of living without credit indicates that you are on your way toward financial disaster.
“Credit should be used as a convenience, not to supplement income. It is a warning sign if a person is not able to manage his or her daily lifestyle without the use of credit cards, as this is a dangerous habit that could lead to serious financial distress,” said Cunningham in a statement.
To drive this point home, the NFCC mentions the fact that last year the average consumer who reached out to a member agency for financial counseling had between five and six credit cards with a total unsecured debt equal to half of their annual household income.
The NFCC lists a few red flags that your debt is spiraling out of control:
• You pay only the minimum on credit card bills each month
•Your credit card balances keep growing
•You skip monthly payments, pay late, or don’t pay the full amount
•Arguments in the home over money
•You are charging items that were previously paid for with cash
•You are considering bankruptcy or debt settlement
If you are having trouble managing credit, reach out to your creditors for help. You should also make an appointment with a certified credit counselor. The NFCC can point you in the right direction. Call (800) 388-2227 to be connected to a local agency.