Credit Card

Staying on top of the number of bills to pay these days is exhausting. Mortgage (or rent), car payments, gas and fuel, healthcare, student loans (or other loans), mobile phone, TV and internet, water, electric utilities, repair bills, pet bills, kid’s activities – the list seems never to end. Moreover, that doesn’t even include our regular purchases like groceries, eating out, and of course, non-essential services like Amazon or Netflix.

In a way though, that’s life. Our grandparents did it, and our parents did it too. Managing a budget isn’t new.

Something has happened in the last few decades, however, that has really changed our spending habits. Unlike before, more and more American’s are acquiring debt. While this once was viewed as a major faux pas, racking up credit card debt, and borrowing time to pay off big purchases, is the norm now. Plus, with the advent of points and miles from the credit card companies, instead of paying for products and services out-right credit card bills accumulate faster than expected.

While laying the blame squarely on credit card companies isn’t completely fair, several studies conclude that 7-8 out of 10 Americans hold and keep a credit card on them and according to the Federal Reserve, Americans owe more than $1 trillion in credit card debt.

Because we’re continually putting purchases on our credit cards, it becomes yet another bill to pay at the end of the month. Unlike monthly bills like our utilities, the tricky part with credit cards is they can rack up debt from interest quickly. About 44% of adults in the U.S. don’t pay their credit cards off at the end of each month, leaving on average an outstanding balance of $6,600. This is what is called revolving credit.

Unfortunately, lower-income Americans are the ones who often fall into this difficult-to-break habit, and their debt only increases, compounding the problem and ultimately preventing their goal of getting ahead on their monthly bills.

Even worse, some people have to pay their bills with their credit cards. According to Ruth Van Derostyne, founder and credit counselor at Financial Education Services, anyone looking to pay bills with credit cards “needs to be disciplined” and will be okay as long as they adhere to two rules:

  1. Always pay your balance in full, and on time, each month.
  2. Never put bills on a credit card because you can’t afford to pay them.

These two rules are important because debt compounds quickly and often leave consumers unable to pay down the principal. Suddenly, the balances are too large to pay off. That means being able to cover emergency expenses, last minute veterinary or medical bills, and higher than usual regular monthly bills. That includes energy – everything from the price of gas to home heating and cooling.

On average, Americans spend around $320 per month on electricity, natural gas, water, and garbage/recycling services. We spend about that same amount on TV/Internet and mobile phones. Considering one grouping is deemed essential, while the other is not, helps put things in perspective.

In comparison, energy prices are pretty darn low right now. ”Smart” technologies, Energy Star appliances, and new construction materials now allow you to turn your thermostat up or down from the push of a button on your phone, give you more control over moderating energy efficiency and helping to save consumers more money on heating and cooling costs.

So, the next time you look at the credit card bill, you can be thankful energy probably isn’t the culprit for its out-of-control growth, but for that to continue, we need to be thoughtful not only at the way we use energy but how we create policies around its use and development.