WASHINGTON (8/8/13)--About one in five consumers--18%--believe that carrying credit card debt over from month-to-month is a responsible way to manage finances, according to a recent National Foundation for Credit Counseling (NFCC) online poll.
"The data suggest that not only are many Americans are using credit cards to fund a lifestyle their income can't support, but they are comfortable doing so," said Gail Cunningham, NFCC spokesperson.
Credit unions can advise their members of these consequences of carrying credit card debt from month to month:
Credit unions can advise their members of the consequences of carrying debt from month to month:
Interest on a credit card is typically calculated on an average daily balance. For those who carry a balance over from the previous cycle, interest is not only charged on the unpaid balance, but on any new purchases added to the balance, said NFCC.
With interested added onto the balance month after month, consumers end up paying interest on the interest.
Carrying a balance has the potential to negatively impact a person's debt-to-credit ratio, one of the main components of credit scores, said NFCC.
A higher balance decreases the amount of credit available for future purchases.
Most (61%) said they believe paying credit card debt in full each month is the only responsible way to manage personal finances.