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It might seem odd that as the economy slowly improves, Americans continue to rack up more credit card debt. But, according to experts, people often make big mistakes when they’re trying to rid their finances of debt.

Credit Card Debt Increases

“American consumers deleveraged after the financial crisis, but they’re starting to take on more debt again,” says president of credit-card advice website, Ben Woolsey. At the end of June 2014, the total amount of outstanding revolving credit card debt in the U.S. reached $873.1 billion. This is according to the the Federal Reserve. This amount is up from the $861.5 billion of the first quarter of 2014.

Average American Household

According to personal finance site, based on the Federal Reserve and government data the average American household averages: $15,480 in credit card debt, $156,474 in mortgage debt, and $33,424 in student loan debt. All together, Americans owe a total of roughly $11.74 trillion in debt. That’s up 5% from last year.

Making Mistakes

According to president and CEO of BALANCE (a subsidiary of the non-profit Consumer Credit Counseling Service), Kathryn Davis, people mired in debt often make rookie mistakes, and some just panic.  Some of these rookie mistakes to not do:

1. Take out a payday loan or title loan.

2. Transfer a balance to a new zero-interest credit card and then don’t pay off the balance before the higher interest rate kicks in.

3. Borrow from a 401(k) retirement account (this is especially dangerous if it involves paying a penalty).

4. Put creditors on rotation. This means paying one creditor and not paying off other debts.

“When people sense that they’re in a financial squeeze, they start putting Band-Aids on the problem,” says spokeswoman for the National Foundation for Credit Counseling, Gail Cunningham. She goes on to add that, “Debt settlement and bankruptcy should only be considered when you’ve run out of all other options.”

Source: USA Today, You’re paying off debt wrong, August 13, 2014

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