Individuals can really feel a variety of disgrace about being in bank card debt. They assume it means they’re dangerous with cash. That it is one thing to keep away from, or a burden they’ll by no means repay.
However for monetary educator Rita-Soledad Fernández Paulino, founding father of Wealth Para Todos, we should always merely see debt for what it’s. “It is simply what we use when we do not have entry to money reserves,” she says.
And sadly, our assumptions and feelings round debt can stop us from managing our cash with confidence, she says. They’ll cease us from being sincere with ourselves about our monetary scenario, getting the help we have to repay our debt and even leveraging debt to our benefit.
Listed here are three widespread debt myths and the way they’ll have an effect on our funds.
Delusion: Individuals in bank card debt are horrible with cash
Some individuals assume that these with debt have a spending drawback or do not know learn how to funds, says Fernández Paulino. However that is usually not the case.
About 45% of respondents to a 2025 Bankrate survey mentioned that their bank card debt got here from emergencies or surprising bills. That features automotive issues, medical payments and residential repairs.
Individuals additionally rack up debt throughout nerve-racking life occasions. “The shoppers that come my manner have often handled the demise of a cherished one and are scuffling with a lot grief that they wrestle to point out up for work,” Fernández Paulino says. “Or they have been coping with medical points and are in debt for remedy.”
That is why it is so vital to stash money away for emergencies whereas creating your plan to pay down your debt, she says. If an unexpected occasion occurs and you do not have these funds, you might get caught in one other cycle of debt.
Create your plan to pay down debt. Sign up for Life Kit’s newsletter series.
Delusion: It’s best to keep away from debt in any respect prices
Individuals could really feel scared or responsible about utilizing a bank card for a lot of causes. Possibly they grew up in a household that struggled with debt, did not discuss funds or handled chapter or a house foreclosures, Fernández Paulino says. “They develop up considering: Debt is the issue, so I am by no means going to make use of it.”
Others keep away from bank cards as a result of they grew up with misconceptions about debt, stemming from a lack of information about how funds work within the U.S., says Fernández Paulino, who works with many immigrants. “So once they begin utilizing a bank card, they do not know learn how to use it.”
Everybody ought to have at the very least one bank card in good standing, says John Kiernan, managing editor of WalletHub, a private finance web site. “It sends constructive info to the credit score bureaus every month, which makes your credit score report look higher and results in a greater credit score rating, which opens a variety of doorways for lending.”
Studying extra about how debt works might help you perceive learn how to use your bank card strategically, Fernández Paulino says.
To learn more about how credit cards work, sign up for Life Kit’s newsletter series.
Delusion: Getting out of debt is unattainable
“It is not true you can’t get out of debt,” Fernández Paulino says. “What’s true is that with out sufficient month-to-month surplus — cash left after fastened bills and variable bills, minimal funds and a few saving — progress is gradual.”
If you wish to repay your debt sooner, deal with “constructing a surplus so there’s vital further money to throw at balances,” she says. That may imply tightening your funds to avoid wasting more cash, or getting an additional supply of earnings.
“When shoppers construct that surplus, they’ll make dents rapidly,” she says. “I’ve had shoppers eradicate 5 figures of debt in six months, others take 12-36 months.”
The timeline of while you repay your debt is pushed by three variables: beginning steadiness, rate of interest and constant further money stream, she says.
Find out how to save money in your budget to pay off debt. Sign up for Life Kit’s newsletter series.
Join Life Equipment’s Information to Paying Off Credit score Card Debt
On this one-month publication sequence, monetary educators clarify learn how to create a bank card fee plan that works together with your funds, so it can save you cash and make a significant dent in your debt. Click here to subscribe to the newsletter now.
The digital story was edited by Clare Marie Schneider and Marielle Segarra, with artwork path by Beck Harlan. We would love to listen to from you. Depart us a voicemail at 202-216-9823, or e-mail us at LifeKit@npr.org.
Hearken to Life Equipment on Apple Podcasts and Spotify, or join our newsletter.
