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“I’m broke” are the words nobody wants to say but often inevitable for people who repeat harmful financial mistakes without realizing it.
Those habits may lead to a cash shortage in crucial moments, driving people to take on debt to make ends meet.
While every individual’s financial situation is different, experts believe certain habits can tank bank accounts, no matter who you are. So a change in mindset is critical.
“A helpful mantra is: ‘Will this financial choice benefit my future self?’” Elisabella Ricca, personal finance and consumer analyst at TopCashback.com, told The Independent in an email. “This can help you to be more future-oriented and make smarter financial decisions.”
These are three common money habits keeping you broke — at all stages in life.
Credit card debt
A common bad habit for Americans is paying interest on credit card debt, Ricca said.
Some 44 percent of consumers carry a credit card balance, the Federal Reserve Bank of New York reported in March 2025. The average interest rate on those accounts is 22.15 percent, according to federal data, making credit card balances more expensive (on average) than personal loans and car loans.
“Paying interest means you’re paying more for your purchase in the long run, as well as using future dollars to pay for past financial decisions,” Ricca said.
The bridge for this gap in financial progress is creating a budget and following it, she said.
“Instead of spending more than you can afford, only charge to a credit card what you can pay off in full each month,” she said. “If you don’t trust yourself to stick to your budget, use a debit card or cash instead.”
Minimum payments
Some 10 percent of credit card customers make the minimum payment on their credit card each month, according to the Federal Reserve. The typical minimum is 2 percent of the card’s balance, according to USAA.
Doing so can stretch out repayment much longer and rack up interest charges.
“Making only minimum payments while continuing to use the cards also keeps balances growing,” Eric Pemper, managing member at debt and tax relief firm CuraDebt, told The Independent fin an email.
A credit card with a $10,000 balance and the average interest rate of 22.15 percent would take almost 12 years to pay off using minimum payments of $200 – the interest charges alone would be $8,162.60, or nearly half the original balance, according to Credit Karma’s payoff calculator.
Adding $100 to every monthly payment would reduce the payoff time of the $10,000 balance by half and save around $2,400 in interest payments.
“While paying only the minimum can keep your account in good standing, it can also allow the high-interest debt to stack up,” personal finance expert and debt relief attorney Leslie Tayne told The Independent in an email. “This costs you significantly more in interest and … keeps you stuck in a cycle of debt.”
Avoid retail therapy
Shopping on a whim or when emotions are running high is a costly habit that chips away at your checking account or piles onto the credit card balance, financial coach Kristine Stevenson Seale told The Independent in an email. The typical monthly “emotional spend” is around $65, according to financial services firm Self Financial.
“Rather than addressing the real issue, a small purchase provides immediate gratification with a small dopamine hit,” she said.
Sadness is known to drive spending that consumers may not be able to afford, according to a December 2024 article from the Cleveland Clinic, because the emotional state is linked to a loss of power and control. And what’s an easy way to restore a sense of control? Shopping.
“Regardless of whether the purchase is a good idea, selecting a product can restore a feeling of personal control and autonomy. The result: A reduction in our feelings of sadness,” the clinic wrote.
The remedy for retail therapy takes some internal work, Stevenson Seale said.
“The most important part of changing these bad habits is learning to love yourself in the truest sense of the word,” she said. “Stuff doesn’t make a person happy.”
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