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Credit Cards

Here's why it’s so hard to remain debt free after paying off your credit card

Select breaks down three main reasons why so many people have such a tough time staying debt free.

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Terms apply to American Express benefits and offers. Visit americanexpress.com to learn more.

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While paying down debt is often easier said than done, sometimes, even when we finally experience that sweet, sweet feeling of having a $0 credit card balance, it usually isn't too long before we start to see the balance balloon once again.

Below, Select breaks down three main reasons why staying debt free is so tough for so many people and what you might be able to do to help get things back on track.

1. You don't have an emergency fund

An emergency fund is a very important part of your finances and the money in that account should only be used for surprise expenses, for instance, if your car suddenly needs an unexpected repair or if you lose your phone and need to replace it ASAP. That way, you can avoid going deeper into debt and still cover unexpected bills.

When you don't have an emergency fund set up or enough cash on hand to cover surprise expenses, your first instinct may be to use a credit card to float the fee. Depending on how much it costs, doing this could leave you having to make small payments over several months to become debt free again.

Having an emergency fund of just $1,000 can help you feel better equipped to handle the unexpected without having to take on too much additional debt. While most experts say you should aim to save three to six months' worth of your necessary living expenses in an emergency fund, it's fine to start small and work your way up from there.

It can also help to use a high-yield savings account such as the Ally Online Savings Account or the Marcus by Goldman Sachs Online Savings Account, so you can earn more interest each month compared to traditional banks and grow your balance just a little bit faster.

Ally Bank Savings Account

Ally Bank is a Member FDIC.
  • Annual Percentage Yield (APY)

    4.35% APY

  • Minimum balance


  • Monthly fee


  • Maximum transactions

    Unlimited withdrawals or transfers per statement cycle

  • Excessive transactions fee

    $10 per transaction

  • Overdraft fee


  • Offer checking account?


  • Offer ATM card?

    Yes, if have an Ally checking account

  • Terms apply.

2. Pricier items no longer fit into your current budget

It's no secret that the cost of living has been increasing lately due to inflation. After all, inflation in 2022 has had the biggest impact on all the essentials, including the cost of gas, buying a car, rent and groceries. Even if you've always deemed yourself to be pretty good at budgeting, if your monthly income just doesn't provide enough money to support these price increases, you may find yourself falling back onto a credit card so you can afford some of these big-ticket items.

From there, you might find yourself continuing to pay for groceries or gas with a credit card each month and before you know it, you will have racked up a sizable balance again. Even if you used a rewards credit card like the Blue Cash Preferred® Card from American Express — which gives you 6% cash back on up to $6,000 per year on purchases at U.S. supermarkets (then 1% thereafter), and 3% cash back at U.S. gas stations — the cash back is only impactful when you can pay off your balance in full each month and avoid paying additional interest charges.

Blue Cash Preferred® Card from American Express

On the American Express secure site
  • Rewards

    6% cash back at U.S. supermarkets on up to $6,000 per year in purchases (then 1%), 6% cash back on select U.S. streaming subscriptions, 3% cash back at U.S. gas stations, 3% cash back on transit (including taxis/rideshare, parking, tolls, trains, buses and more) and 1% cash back on other purchases. Cash Back is received in the form of Reward Dollars that can be redeemed as a statement credit or at Amazon.com checkout.

  • Welcome bonus

    Earn a $250 statement credit after you spend $3,000 in purchases on your new card within the first 6 months. 

  • Annual fee

    $0 intro annual fee for the first year, then $95.

  • Intro APR

    0% for 12 months on purchases from the date of account opening

  • Regular APR

    19.24% - 29.99% variable. Variable APRs will not exceed 29.99%.

  • Balance transfer fee

    Either $5 or 3% of the amount of each transfer, whichever is greater.

  • Foreign transaction fee


  • Credit needed


See rates and fees, terms apply.


3. You haven't addressed the underlying causes of your high spending habits

Changing our spending habits is often difficult since our subconscious beliefs and past experiences play such an important role in our relationships with money. According to Paco de Leon, author of "Finance for the People: Getting A Grip On Your Finances," not recognizing and dealing with these underlying beliefs can keep us trapped in a cycle of paying down debt only to incur it all over again.

For example, someone who gets stressed out and copes by shopping online may work hard to pay off their credit card debt completely, but the next time they use retail therapy to ease their stress, they'll just end up right back in credit card debt. In this case, paying off their balance won't do anything to address how they cope with stress, and the cycle of debt will continue.

De Leon recommends journaling or hiring a coach as a great way to start to uncover some of your beliefs and habits around the way you spend money and use debt. It may also help to use a budgeting app such as YNAB (You Need A Budget) or Mint to get a clearer picture of where your discretionary spending is highest and possibly pinpoint significant triggers that may have caused it.

Catch up on Select's in-depth coverage of personal financetech and toolswellness and more, and follow us on FacebookInstagram and Twitter to stay up to date.

For rates and fees of the Blue Cash Preferred® Card, click here.

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
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