MONEY Credit

5 Ways You’re Accidentally Wrecking Your Credit

pieces of credit card in hands
Roy Hsu—Getty Images

Certain actions, like closing a high-fee credit card, might seem financially savvy. But there could be consequences for your credit.

It’s one thing to knowingly make decisions that hurt your credit score. We’ve all been there, and sometimes tough decisions must be made. But it’s an entirely different situation to accidentally wreck your credit.

In some cases, we make decisions without realizing the impact on our credit. In other cases we may know that certain decisions can hurt our score, but we don’t appreciate the severity of the impact. Either way, maintaining good credit requires more than casual attention.

It is entirely possible that you could be accidentally wrecking your credit, and here are some of the ways that you could be doing just that.

1. Not Paying Attention to Your Credit Balances

Good credit is about more than just paying bills on time. About 30% of your credit score is based on your amount of debt, which includes your credit utilization. That’s the ratio of how much you owe on your credit lines divided by the total credit limit of those lines. For example, if you have total credit lines of $40,000, and you have a total outstanding balance of $10,000, your credit utilization ratio is 25% ($10,000 divided by $40,000).

If that ratio exceeds 30%, it can have a negative impact on your credit score. If you are casual about your credit balances, they can slowly creep up to 40%, 50%, 60% or more. At that point, you may see your credit scores begin to sink.

2. Closing Accounts

A lot of people make it a habit of closing out any credit cards that they pay off. From a credit perspective, however, this can have a negative impact. Though it seems counter-intuitive, a paid in full line of credit or credit card is a positive contributor to your credit score, even if you stopped using the account.

This brings us back to credit utilization. If you pay off a credit card that has a line of $5,000, that available credit is contributing to the total amount of credit you have available. That will improve your credit utilization ratio. Closing the card will lower your available credit, increase your overall credit utilization, and potentially lower your credit score.

3. Co-Signing Loans

Co-signing loans is another area where people are often very casual. They often assume that they are just doing a good deed to help a friend or family member, and may even mistakenly believe that it’s simply a one-time event.

But when you co-sign a loan, you will be involved in that loan and that loan will be on your credit report until it is fully paid. In the event that the primary borrower makes a late payment, this will have an impact on your credit score. Worse, should the loan go into default, this will also show up on your credit.

4. Applying for Too Many Lines of Credit

If you have good credit, it’s likely that you are getting bombarded with credit offers in the mail on a weekly basis. If you are in the habit of applying for the better ones every month or so, you could be unknowingly hurting your credit.

Credit inquiries account for 10% of your overall credit score. While this is the least significant factor, these hard pulls — as they are called — can ding your credit. Consider the impact these inquiries can have the next time you consider a 0% credit card offer or bonus miles sign-up deal.

5. Not Monitoring Your Credit Scores

One of the best ways to know if you are hurting your credit is by monitoring your credit scores. Credit scores change on at least a monthly basis, but typically stay within a tight range. A significant drop in your scores, say more than 25 or 30 points, is an indication that something is wrong. You won’t know about the drop, however, unless you are paying attention to your credit scores on a regular basis.

A significant drop in your score could be an indication that your credit utilization ratio is getting too high. It can also indicate an unsuspected late payment. Errors are also possible when it comes to credit. And at the extreme, a big drop in your credit score could be an indication that you are the victim of identity theft.

You won’t know any of these unless you are monitoring your credit scores on a regular basis. Unfortunately, ignorance is not bliss when it comes to your credit. You shouldn’t obsess about it, but at the same time, you should never be too casual about it, either. Bad things can happen when you’re not paying attention.

Fortunately, there are a number of ways to obtain and monitor your score for free, including through

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Don’t Use These Weird (But Common) Excuses for Not Paying Your Bills

past due stamp on top of bills
Derek E. Rothchild—Getty Images

Managing your finances isn't easy, but it's a lot harder when you start lying to yourself.

A few weeks ago, an acquaintance asked me about my job, and upon hearing that I write about budgets and credit cards (and such), she had something she wanted to share. She doesn’t like to pay her credit card bills on time, she told me, because it makes her nervous to see her bank balance dip so low afterward.

People tell me random tidbits about their finances all the time, and I know she’s not alone in doing things with her money she knows she shouldn’t. Others are misinformed about things that will help or hurt their credit or overall financial health, which is probably a much bigger problem than people who go out of their way to justify poor habits.

Inspired by this interaction, I asked several people who work in personal finance to share the strange excuses they’ve heard from people when explaining why they can’t or won’t pay their bills on time.

Fear of a Low Balance

There are millions of Americans who legitimately can’t afford their bills, but there’s a difference between not having enough money in your bank account and not wanting to see the balance get smaller after you’ve paid a bill. You may have to pay a fee if your account balance drops below a certain level, and you should avoid that if you can, but skipping a bill could be much more costly. Late fees will add up, and if you forget to make a payment, your credit score will suffer. (You can see how late payments are affecting your credit scores for free on

No one likes seeing their bank accounts shrink, but if you’re tracking your spending, keeping to a budget and monitoring your accounts for unauthorized activity, you shouldn’t have to worry about account fluctuations. That’s just how the cycle of getting paid and paying bills works.

The Myth of the Credit-Building Balance

This is one most credit experts have heard: Carrying a balance on your credit card will help you build credit.

When using a credit card, the two best things you can do for your credit are pay your bill on time and use a small portion of your available credit (generally less than 30% of your limit, but an even lower credit utilization rate is better). Whether you carry a balance from month to month has no direct impact on your credit score.

However, if you’re carrying a balance and continue to add to it, either with new purchases or with the interest the balance accrues, you could hurt your credit utilization rate and end up hurting your credit. If you can, it’s a good idea to pay your balance on time and in full every month.

The Bill Protester

Sometimes people just don’t know what they’re getting into when they use credit cards, so when they get a bill they think doesn’t reflect their spending, they balk.

“We run into some people who, regarding credit cards, won’t pay because they’re angry with the high interest rates or they’re angry about the fees,” said John Szalicki of Cambridge Credit Counseling. These people think they’re taking a stand against the credit card company by refusing to pay. “We tell them it doesn’t work like that.”

Some consumers take a similar approach with other financial obligations as well, “protesting” by not paying parking tickets, refusing to pay the utility company they think billed them incorrectly, ignoring payments for student loans taken out for a degree they never earned, and so on. That tactic usually wrecks consumers’ credit, by way of collection accounts and sometimes lawsuits, in addition to costing more with late fees and collection fees.

There are avenues for resolving billing errors, and while they’re often time-consuming or frustrating, using them is a better idea than doing nothing.

Credit Card Confusion

Szalicki said he has also seen consumers who don’t understand how interest, finance charges or promotional offers through credit cards work, leaving them stunned and unable to afford the credit card bills they receive.

If you’re using a credit card, you need to know if it has an annual fee, what the interest rate is and what you as a cardholder have to do to hold up your end of the agreement. Otherwise, you could find yourself owing more than you thought.

Prioritization Problems

This is perhaps the worst offender when it comes to excuses for not paying the bills. Thomas Nitzsche of ClearPoint Credit Counseling Solutions asked counselors to share some of the most notable excuses they’ve heard from clients for not being able to pay their bills.

“One client said that doggie daycare was the reason she couldn’t pay her bills,” Nitzsche said. The consumer’s veterinarian had recommended daycare three times a week to socialize the dog, and at $50 a day, the costs added up very quickly. It wasn’t something the consumer wanted to give up, despite not being able to afford it.

Deciding what to cut out of a tight budget is difficult, and everyone will prioritize differently, but it’s hard to not shake my head at some of the stories Nitzsche shared with me.

There was the family that spent roughly $7,600 each year on trips to Disney World, and despite being in unaffordable credit card debt, they weren’t willing to stop making the trips. These vacations were their family time, which they wanted to continue doing until their kids got too old for it.

Then there was a couple who prioritized their car payments because without the cars, they couldn’t get to work and make the money they need for everything. That’s a fair point, but two months before entering credit counseling, the couple had taken on two new car payments, adding up to several hundred dollars a month. The car payments cost more than their mortgage payment. It was a clear case of wants overtaking needs, Nitzsche said.

Parents making sacrifices for their kids was a common theme, but it seemed people struggled to see the difference between making sacrifices and risking financial ruin for the sake of their children (i.e. falling behind on bills or mortgage payments so the kids could go to private school).

My favorite from Nitzsche’s collection of anecdotes was the binge-before-purge method: “‘I didn’t pay the bills in December because I wanted to have one last good Christmas before I tackle the bills in January.’ … We always see an uptick in January and February of people who put their heads in the sand in December,” Nitzsche said.

All that does is make the road to recovery more challenging, in terms of rebuilding your credit and getting your finances in shape. It may feel good in the moment, but as it is with most excuses, you’ll kick yourself later.

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Court Finds American Express Rules Violated Antitrust Laws

A federal judge ruled AmEx violated antitrust rules by not allowing merchants to encourage customers to use other credit cards.

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Why American Express Users Should Be Worried About Their Rewards

American Express card in wallet

A recent court ruling against American Express could put the company's vaunted rewards program in danger.

AmEx cardholders, beware. A new court decision may have put your rewards in danger.

On Thursday, a federal judge ruled the credit card company had violated antitrust laws by preventing merchants from encouraging customers to use other cards. That may not sound like a big deal, but it could cost American Express billions of dollars over time and seriously curtail the services it can afford to provide its customers.

What’s behind all of this? It comes down to something called interchange fees. For the last four years, American Express has been fighting with the Justice Department over how the company treats its merchants. Store owners must pay credit card companies an interchange fee—generally between 2% and 3% of an individual purchase—every time a customer swipes at checkout. The credit card companies take much of that money as profit, while also giving some portion of it back to cardholders in the form of cash back, airline miles, or other rewards.

American Express has historically charged higher interchange fees than Visa and MasterCard, making it theoretically able to give better rewards. That’s great for AmEx users, but not so great for store owners who would like to encourage their customers to pay with a different, less expensive card. Costco recently ended an exclusive relationship with AmEx due to cost concerns that likely included interchange fees.

American Express has thus far prevented this kind of revolt by specifically forbidding their merchants from giving cheaper cards special treatment, such as discounts, or even telling customers American Express is bad for their businesses. Thursday’s ruling says this kind of contract violates the law.

If the judge’s decision holds, Amex will likely be forced to charge lower interchange fees or risk merchants actively steering customers toward competitors. Less money for AmEx could in turn mean worse benefits for its users or higher membership fees to make up for interchange losses.

“Every time you start taking away from credit card companies they’re going to make it elsewhere,” says James Wester, a global research director at IDC specializing in payments. “If it’s not in higher [membership] fees, it may be in lower benefits or membership rewards.” He notes that the so-called “Durbin Amendment,” which limited debit card swipe fees, ultimately led to the demise of debit card benefits.

Some have argued lowering AmEx’s fees would be a boon for the general public, if not for American Express users themselves, because merchants would pass that savings on to the consumer through lower prices and/or discounts for those using cheaper cards. But the economics of that position don’t seem to hold up.

The difference between an Amex swipe fee and a Visa swipe fee is tiny, meaning any noticeable discount for users of low-fee cards would probably eat away any money the merchant would be saving. “It wouldn’t make sense to give 10% off a purchase if you’re saving 1% of an interchange fee,” says Matt Schultz, senior industry analyst at

Lower fees also don’t seem very likely to bring down in-store prices. “Retailers are seeing extra costs of their own these days with implementation with EMV terminals and extra technology for combating fraud,” adds Schultz. “Whether that money they would save on the interchange fees would end up coming back to the consumer, it’s hard to say.”

In the end, the ruling may simply transfer wealth from AmEx and its members to merchants and store owners with little impact on everyone else.

That said, don’t burn your American Express card just yet. While Judge Nicholas Garaufis did rule against AmEx, he didn’t impose his own solution. Instead, he essentially told the company and the Justice Department to figure out their own fix and come back to him later. It’s possible both parties will come to a compromise that doesn’t end up seriously reducing the company’s interchange fees.

AmEx has also said it will appeal the judge’s decision, meaning a true resolution to the whole affair is still far in the distance. “It’s certainly appealable,”said Steven Cernak, an antitrust lawyer at the law firm Schiff Hardin, who thinks another trial would take a year at minimum. “My guess is they will take another shot to convince a panel of three judges this judge got it wrong.”

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3 Secrets to Maximizing Your Credit Card Travel Rewards

travel rewards first class

A ticket to the first-class cabin may be in your future if you follow these strategies

Consumers lately have been favoring credit cards that give cash back over those with travel rewards.

Less than half of credit cardholders surveyed by recently accumulate travel points or miles, and only one in three Millennials. It’s no wonder, given that airlines have seriously devalued frequent flier miles and made it more difficult to redeem points for tickets.

“But there is still tremendous value in getting the right travel card,” says Brian Kelly founder of

What to Look For

•A hefty bonus. Sign-up bonuses among the 20 most popular travel cards increased 25% this year, according to Kelly. And in some cases, he adds, just a single bonus can provide enough miles for a first-class airline ticket anywhere in the world.
•Flexible redemption options. To get the most for your spending dollar, Kelly notes, you’re likely better off skipping airline-branded cards that let you rack up miles on a particular carrier (since these limit your redemption opportunities) in favor of cards that let you transfer miles to other loyalty programs or allow you to use the rewards you’ve accumulated as cash toward any kind of travel purchases.
Most travel cardholders either aren’t don’t have such a card or don’t take advantage.’s survey found that, among the 42% of people who have a travel rewards card, only 19% have ever transferred rewards points or miles from their credit card to an airline’s loyalty program.

•No foreign transaction fees. These are another self-inflicted wound for consumers. According to the survey, one-quarter of all credit cardholders have to pay a fee when they buy stuff overseas (it’s typically 2% to 4%), and one-third don’t know if their card charges them extra. With so many products available that do not charge this fee, a lot of borrowers are throwing money away.

Your Best Bets

MONEY’s two Best Credit Card winners for travel offer among the heftiest bonuses in the biz with no foreign transaction fees, and neither leaves you stuck with one airline.

The Barclaycard Arrival Plus World Elite MasterCard offers a sign-up bonus of 40,000 miles once you spend $3,000 within the first 90 days, in addition to two miles per dollar spent. You can redeem the miles as a statement credit against any kind of travel, and get 10% miles back when you do so. This means that the sign-up bonus alone will earn you $440.

Chase Sapphire Preferred‘s sign-up bonus comes in at 40,000 points after you spend $4,000 in the first three months. You receive double points for dining and travel spending, 5,000 points for adding an authorized user and a 20% discount when you book the travel through Chase. While you can apply the points as cash back for travel, you can also transfer them to a number of partner loyalty programs, including Southwest and United.

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The 5 Funniest ‘Saturday Night Live’ Skits About Money

SATURDAY NIGHT LIVE: WEEKEND UPDATE THURSDAY, (from left): Amy Poehler, Seth Meyers, Kenan Thompson, (Episode 101, aired Oct. 9, 2008), 2008.
Dana Edelson—©NBC/Courtesy Everett Collectio

As the NBC comedy show celebrates 40 seasons on the air, here are MONEY's picks for the best sketches making light of awkward bank ads, the financial crisis, and more.

Over the course of a four-decade run, Saturday Night Live has taken aim at most of the trappings of American financial life—even the things you wouldn’t think were funny, like stock market crashes and consumer debt. In honor of the show’s star-studded anniversary celebration this Sunday, here are MONEY’s favorite SNL sketches about money, spanning nearly all of its 40 years.

1. Fix It! (Parts One and Two)

In these two Weekend Update segments, Kenan Thompson plays Oscar Rogers, a “financial expert” who describes a path out of the 2008 financial crisis.

Best line: “Fix it! It’s a simple three-step process. Step one: Fix! Step two: It! Step three: Fix it! Then repeat steps one through three until it’s all been fixed!”



In that one phrase, Thompson gives voice to the powerlessness and frustration felt by laid-off workers and pummeled investors worldwide. (We wonder what John Belushi’s samurai stockbroker would have to say about that.)

2. First CitiWide Change Bank

This 1988 commercial parody—featuring Jan Hooks, Kevin Nealon, and Jim Downey—highlights just how unimpressive financial services can be, in an ad for a bank that brags about offering change to customers. And they don’t mean it in the Obama way.


Best line: “We are not going to give you change that you don’t want. If you come to us with a hundred-dollar bill, we’re not going to give you two thousand nickels—unless that meets your particular change needs.”

Joking about how weak bank services are would be funnier if it weren’t so true.

3. “Don’t Buy Stuff You Cannot Afford”

Steve Martin and Amy Poehler play a couple in need of a budgeting intervention in this 2006 skit, featuring Chris Parnell as the author of a, shall we say, intuitively titled book about how to control spending.

Best lines:

Parnell: The advice is priceless and the book is free.”
Poehler: “Well, I like the sound of that.”
Martin: “Yeah, we can put it on our credit card!”

If only getting out of debt were as simple as the skit suggests; in reality, paying off loans and gaining financial stability can be hard no matter how smart or hardworking you are. But we’d still pony up for a copy of Stop Buying Stuff magazine.

4. Consumer Probe: Irwin Mainway

This 1976 classic features Candice Bergen as a reporter and Dan Aykroyd as the sunglass-sporting Irwin Mainway, purveyor of such children’s toys as Johnny Switchblade, Mr. Skin Grafter, Doggie Dentist, and Bag o’ Glass.


Best lines:

Bergen: “I just don’t understand why you can’t make harmless toys like these wooden alphabet blocks.”
Aykroyd: “You call this harmless? I got a sliver!”

5. Metrocard

Roseanne Barr plays a 24-hour hotline representative for the fictional “Metrocard” credit card in this 1991 sketch, which sends up confessional-style TV ads highlighting service. Phil Hartman plays a seemingly satisfied customer.

Best lines:

Barr: “And then he gets really mad and tells me I’m supposed to help him! You know, like I’m his mom or something. So I say, ‘Why don’t you call home and have somebody wire you the money? Or call your company and tell them the problem? Or, better yet, why don’t you take a personal check out of your checkbook, roll it up real tight, and then cram it!'”

Hartman: “She gave me several options.”

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4 Times It Makes Sense to Close a Credit Card

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Sometimes your credit card no longer fits your lifestyle or stacks up against the competition.

Should you keep your credit card or cancel it? This question comes up often, especially when the annual fee is due. At that time, cardholders will often want to re-evaluate their use of a credit card, and close an account that they don’t need.

Here are four times it may make sense for you to close a credit card.

1. The Annual Fee Just Isn’t Worth It

There are many credit cards that charge an annual fee, and the additional rewards and benefits offered can often justify this cost. But if you look at the actual value that a particular credit card has offered you over the last year, then sometimes you are forced to conclude that the fee isn’t worth it. For example, if an expensive credit card comes with an airport business lounge membership that you never use, than it is likely that you could receive most of the other benefits of that card from another card with a lower annual fee.

2. You’re Unhappy With the Issuer

The credit card industry is so competitive, that cardholders don’t need to stay loyal to company that they are not satisfied with. For example, if you consistently receive poor customer service from your credit card issuer, then you might wish to cancel the card and give another company a chance to earn your business. Likewise, if the credit card is co-branded with an airline, hotel or retailer that is making it difficult for your to redeem your rewards points or miles, than it might be time to reconsider your relationship with that company, and its credit card.

3. The Rates & Fees Are No Longer Competitive

Because the credit card industry extremely competitive, card issuers are constantly offer new products with better terms. In addition, cardholders themselves who have improved their credit history since they opened their account may now qualify for better cards than they currently hold. So in these cases, it might be better to close an inferior card and replace it with a more competitive product. (If you are not sure where you stand, you can get a free credit report snapshot, updated every 30 days, from

4. You Have More Credit Cards Than You Can Manage

If you have many different credit card accounts open, and you find yourself unable to keep up with all of them, then it might be time to close some. Signs that you might have too many credit cards include the inability to keep track of all your cards, or statements, as well as missing payments. Just make sure not to close too many accounts, since eliminating credit lines will reduce your debt-to-credit ratio for a given amount of debt, which can hurt your credit score.

Alternatives to Closing a Credit Card

Even though you might have a good reason to close a credit card account, there are some worthwhile alternatives to consider. For example, if the card has an annual fee that you aren’t able to justify, the credit card issuer may be willing to waive the fee, or offer points or miles of equivalent value, in order to keep you from closing the account. In fact, it’s rare that a card issuer will allow a customer to close his or her account before presenting them with one of these so-called retention offers.

Another option that cardholders are often given is to transfer their account to a different credit card from the same issuer. For example, a customer who complains of high interest rates might be offered a card with a low interest rate instead of a rewards card. In this way, the card issuer retains their customer, and the cardholder can open a new account without filling out a new application.

Finally, those who have more credit cards than they can manage might wish to simply stop carrying a few of their credit cards and put them in a secure place. This way, cardholders can retain their existing lines of credit and build credit history, without closing their accounts and raising their debt-to-credit ratio. (If you choose this, it is wise to put a small charge on cards from time, particularly your oldest cards, so they do not get closed because of inactivity.)

Having a credit card is not necessarily a permanent relationship, and when thinking about closing an account, cardholders need to make the best decisions for their individual needs.

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The Way You Swipe Your Credit Card Is About to Change in a Big Way

best travel rewards credit card
Robert Hadfield

If your card has an EMV chip, you'll almost certainly be learning a new way to complete transactions.

Have you ever heard of “dipping” a credit card? If you use a credit card in the U.S., then you will be hearing that term lot more this year.

What Is ‘Dipping’?

Dipping is the term the industry has adopted to describe how a credit card with an EMV smart chip is read. An EMV chip is a small silver- or gold-colored square visible on the front of many newly-issued credit cards. Currently, cardholders and merchants “swipe” their cards so that terminals can read its magnetic stripe, but very soon, credit card users in the U.S. will be asked to dip their cards into a card reader to conduct a transaction.

How This Will Work

Credit card users in Europe and other parts of the world where EMV-enabled cards have been issued have gotten used to dipping their cards. Cards are inserted into the terminals lengthwise, with the chip side first. The machine will usually give an audible or visual signal when it has read the smart chip, and a cardholder can then remove the card.

In many ways this is similar to how some ATM machines read magnetic stripes, but in this case, the card doesn’t need to be fully inserted into the machine. In addition, the smart chips will be read much more reliably, so cardholders won’t have to experience the frustration of having a worn magnetic stripe that must be swiped several times.

When Will We Start Dipping Cards in the U.S.?

On Oct. 1, the credit card industry will undergo what is being called the liability shift. What this means is that retailers will be responsible for the cost of fraudulent transactions when they have failed to upgrade their credit card readers to be smart chip compatible, and when customers have a chip-enabled card. On the other hand, when customers weren’t given cards with smart chips, but the retailer has deployed the latest credit card terminals, then the card issuer will bear the liability if the transaction is fraudulent. In either case, cardholders are protected from fraudulent charges by the Fair Credit Billing Act. This law limits a cardholder’s liability to $50, but nearly all card issuers go beyond the law to offer a $0 liability guarantee.

Rather than have all retailers change over their machines on midnight of Sept. 30, the liability shift was designed to encourage both retailers and card issuers to adopt the latest technology gradually, and to give all parties a chance to get up to speed at their own pace. Nevertheless, gas stations and ATM machines will be given until October of 2017 to comply with the new standards. At this time, there are many retailers that are using terminals that have a place for customers to dip their cards, but so far few (Walmart is a notable exception) have actually enabled this functionality.

As the Oct. 1 liability shift approaches, more and more customers will be asked to start dipping their cards at compatible card readers, even though these terminals still have a magnetic stripe reader. Inevitably, there will be some minor confusion as customers and cashiers have to unlearn habits formed over decades of credit card use, and figure out when they need to swipe their cards, and when cards must be dipped.

Most observers expect this confusion to be short-lived, as the industry moves forward into a more advanced and secure method of reading credit cards for retail transactions.

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Americans Are Taking on More Debt—Again

Is it time to worry?

If the definition of insanity is doing the same thing over and over again and expecting different results, then Americans are starting to look a little batty: The average American’s consumer debt is climbing back to the highest levels since we exited the Great Recession. At the same time, however, mortgage payments are declining thanks to the current low home prices. So should Americans we be worried about the uptrend in consumer debt?

Debt on the rise

According to the Federal Reserve, Americans’ appetite for loans is increasing again. The amount of revolving credit outstanding, which primarily reflects credit card debt, totaled $882.1 billion in November, up from $853.3 a year prior. The amount of student loan debt outstanding has climbed from $1.21 trillion to $1.3 trillion; auto debt outstanding has grown from $866.4 billion to $943.8 billion; and mortgage debt outstanding increased $35 billion between the second and third quarter to $8.13 trillion. As of the third quarter, the Federal Reserve Bank of New York pegs Americans’ total debt at $11.71 trillion.

Those numbers may look great to banks like Wells Fargo WELLS FARGO & COMPANY WFC -0.7% , which rely on rising loan volume to pad earnings, but they should be worrisome to American consumers, because they suggest millions of people are spending more money paying down debt and less money saving for a rainy day or retirement.

Straining balance sheets

In the past year, the amount of revolving debt taken on by consumers has grown by 3.3% — nearly double the rate of growth in the average American’s income. As a result, the percentage of the average American’s disposable income that goes toward paying monthly consumer debt payments — such as credit cards, student loans, and auto loans (but not mortgages) — has increased for seven consecutive quarters to 5.3%.

Although the percentage of disposable income that goes toward consumer debt payments still remains below its prior peaks, the current trend could be worrisome, especially if it ends up mirroring the trend that followed the savings and loan crisis in the early 1990s.

Is this a big deal?

Although Americans are paying a greater share of their disposable income to finance consumer debt than they were a year ago, there’s little evidence to suggest that consumers are anywhere near a tipping point that could cause budgets to buckle, spending to sag, and the U.S. economy to slide. In fact, the bigger picture of household debt is much less worrisome than those consumer debt figures.

The financial obligations ratio — a broad measure that, unlike the debt-service-to-obligations ratio, includes rent payments, home owner’s insurance, and property tax payments — is at its lowest levels since the early 1980s. And the total debt-service ratio, which includes consumer debt andmortgages, stands close to 35-year lows at 9.9%. Thus these more comprehensive measures paint a much prettier picture of the average American’s financial situation than the consumer debt payment ratio alone.

Everything is OK — for now

With lower mortgage payments offsetting higher payments on credit cards, student loans, and auto loans, household debt isn’t likely to sink our economy — at least not yet. However, that could change if home prices inch their way higher and mortgage interest rates start to climb. If that happens, then higher monthly mortgage payments could be cause for concern that the average American’s debt has indeed become a problem again.

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5 Ways Your Credit Card Can Be Stolen Right Under Your Nose

woman using ATM machine at night
Maciej Toporowicz—Getty Images/Flickr

Card thieves have many techniques for stealing your data without you noticing.

There are several things people freak out about when their wallets or purses have been stolen: knowing a thief has your ID (and your home address), losing irreplaceable gift cards or cash, and having to cancel your credit cards. That’s usually the first thing people do — call their banks — but it’s easy to act quickly when you realize you’ve been robbed. Sometimes, it’s not that simple.

Thieves steal credit and debit cards all the time without taking the physical card. The most common kind of card theft results from data breaches. Last year, millions of U.S. consumers had their cards replaced after their information was compromised in one of the massive cyberattacks on retailers, even if their cards didn’t show unauthorized activity. People have gotten used to the idea that data breaches are inevitable, but there are lots of daily activities that put your cards at risk for theft, without you noticing.

1. Drive-Thru

A Pennsylvania woman was recently arrested for allegedly swiping customer cards on a personal card reader while she worked the drive-thru at a Dunkin’ Donuts, WFMZ reports, reportedly using the information to create duplicate cards and charge more than $800 to the accounts.

That’s not the first time a story like this has popped up, and it’s likely to happen again, because the situation presents an easy theft opportunity to drive-thru workers: Customers hand over their cards and usually can’t see what the cashier is doing with it on the other side of the window. It’s not like you should avoid the drive-thru for fear of card theft, but it’s one of many reasons to regularly check your card activity for signs of unauthorized use.

2. Restaurants

How often do you see your server process your dinner payment? Usually, he or she takes your card away from your table and completes the transaction out of your sight. Many restaurant workers have taken advantage of this situation to copy customers’ cards and fraudulently use the information.

3. On the Phone

People are pretty trusting when making orders over the phone, assuming that whoever takes the order is entering the credit or debit card number, expiration date and security code into a payment system, not just copying it down for their own use. On the flip side, it might not be the person on the other end of the call you should worry about — plenty of people read their card information aloud within earshot of strangers, making it easy for someone nearby to write down the numbers.

4. RFID Scanners

Most radio-frequency identification (RFID)-enabled credit and debit cards have a symbol (four curved lines representing a signal emission) indicating the card has the technology for contactless payment. If you have one of these cards, you have the ability to use tap-and-pay terminals found at some retailers, because your card sends payment information via radio frequencies, received by the terminal.

That same technology also allows thieves to use RFID scanners to copy your card data if they get close enough to it and your card isn’t protected. If you’re not sure your card has RFID technology, call your issuer, and if it does, use signal-blocking materials and products to protect it.

5. Card Skimmers

Thieves have been installing copying devices at gas pumps and ATMs for years: They tamper with card readers to install skimmers that copy your card data when you swipe it, so a thief takes your credit or debit card information while you complete an otherwise routine transaction. Experts advise you look closely at card readers for signs of tampering, use ATMs serviced by your bank and check your card activity regularly for signs of fraud.

That’s really the best way to combat credit card theft: Watch closely for it. With online banking and mobile applications, it’s easy to check your accounts every day, making it more likely you’ll spot something out of the ordinary than if you only looked at card activity once a week or so. You can also check your credit score for sudden changes, which can be a sign of fraud or identity theft. You can get two of your credit scores for free every 30 days on

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