Credit Card Debt Hits Record High. How to Avoid the ‘Charge It’ Trap

America is becoming a nation of debtors and we’ve just entered some pretty worrisome territory.

Consumers now hold more than $1.2 trillion in credit card debt. That’s a record high, exceeding by nearly $1 billion the last record seen right before the recession in 2008, according to the Federal Reserve Bank (the Fed), the central bank of the U.S. which sets monetary policy. The Fed also publishes monthly reports about consumer household debt.

Read more: What’s Household Debt?

What’s causing increasing credit card debt?

More banks than ever before have offered consumers credit cards in recent years. Approximately 171 million consumers now have plastic, about ten million more than in 2005.

And it turns out more consumers are spending on credit. That’s not necessarily a bad thing, according to some financial experts. On the plus side, it means as the nation returns to full employment consumers feel confident enough about their jobs and the economy to go out and spend. And consumer spending fuels the economy.

Read more: What to Make of All the Layoffs in the Retail Industry

The downside? Average household credit card debt has also crept up, exceeding $8,000, according to a recent WalletHub survey. That amount is also approaching levels last seen prior to the recession.

Delinquencies on the rise

Delinquencies on credit card accounts have also climbed in the past year, according to the Federal Reserve. Delinquency is when your account is past due, meaning you haven’t made at least the minimum payment on your debt for more than a month.

Serious delinquency means your account is 90 days past due or more. An increase in delinquencies means that consumers are struggling to find cash to pay off balances, or even meet their minimum payment requirements.

Credit card debt: A cause for worry?

Credit card debt is one of three consumer borrowing areas that concern experts as debt levels have continued to rise in the last few years. The others are student loans and auto loans.

Student loan debt has also climbed into record territory, of $1.3 trillion. Auto loans have also steadily increased to $1.2 trillion, according to USA Today. Total household debt, which includes things like mortgages, is now $12.7 trillion, exceeding levels seen last during the recession.

Take control of credit card debt:

Here are some things to think about as you consider credit cards and your credit card debt.

Unlike student loans and auto loans, credit card loans are revolving debt. That means a bank extends you a credit line that’s available for you to use at any time, provided you pay at least the minimum amount each month.

• Look for credit cards with the lowest interest rate you can find. The average rate is currently about 16.65%, which on an $8,000 balance equals $1,300 in interest annually. Some cards have 0% introductory offers. But you need to pay attention to when those offers expire.
• If you have more than one credit card, pay off the balances with the highest interest rates first.
• Don’t miss payments, as that will damage your credit score. Your credit score is essentially a running record of financial trustworthiness, used by banks and other financial services providers to determine rates on everything from auto loans to mortgages.
• Consider using a debit card rather than a credit card, as the money will come directly from your bank account.

Key takeaways: Consumer credit card debt has reached record levels. That’s not necessarily a bad sign, and could reflect confidence in the economy as consumers continue to spend. But late payments are also creeping up, and other forms of debt like student and auto loans are also mounting. If you use credit cards, find plastic with a cheap rate. If you have credit card debt, pay off balances on the highest interest rate cards first. And don’t miss your payments, it’ll damage your credit score.

In short, it’s never a good idea to carry too much credit card debt, as you can quickly find yourself underwater trying to manage the monthly payments and the interest charges.

Read more: 4 (Almost) Effortless Ways to Save Money, Starting Today