Earning More Doesn’t Make You Immune to Credit Card Debt

After hustling your way to an income level beyond your wildest dreams, you finally don’t need to be quite so frugal.

But a combination of lifestyle creep and unexpected costs can quickly eat into those extra earnings. According to a NerdWallet survey from November 2024, 40% of Americans with a household income of $100,000 or more said they currently had revolving credit card debt.

“For most of us, as our income increases, so do our expenses: nicer apartments, upgraded wardrobes, more travel, more dinners out,” said Priya Malani, founder and CEO of Stash Wealth, a registered investment advisory in New York, in an email. “None of these are ‘bad’ in and of themselves, but without a plan in place, it’s easy to wake up one day and realize you’ve got nothing to show for your raises.”

No matter the size of your paychecks, high-interest credit card debt can affect your financial security. By being strategic about your money, you can enjoy the ability to afford more day-to-day expenses while also planning for the future.

This might be the first time in your adult life that you have financial breathing room, but creating a long-term plan for your money requires a big shift in money behaviors. Yes, you can buy more of the things you’ve always wanted, but don’t put off the boring part where you save and invest, too.

“A rising income gives a false sense of security. People assume they can catch up later on retirement, college savings, cash reserves,” says Douglas Boneparth, president of Bone Fide Wealth in New York. “But if you delay saving and life throws something at you — and it will — that sets you back.”

Boneparth advocates for mastering the fundamentals: comparing how much money you earn to what you spend, building savings so an emergency won’t put you in debt, and setting clear financial goals.

“The boring stuff, consistency and discipline over time, is what works,” Boneparth says. “That’s true in every area of life: money, mental health, physical health. It’s self-care.”

A big part of using credit cards to your advantage is understanding how they work. “Earning a solid income doesn’t guarantee financial literacy,” Malani said. “Most of us weren’t taught how to use credit cards responsibly, so the stigma around them takes over.”

Malani recommends treating your credit card like a debit card and only charging purchases you have the cash to pay off. “With this method, you’ll rack up rewards points and the credit card companies get nothing,” she said. “You win, they lose.”

You’ll have to adjust your plan if you end up in debt in the future, but don’t let a temporary setback derail you. “Don’t shame yourself. Use it as an opportunity. Was it a mistake or just a misstep?” Boneparth says. “If it’s a misstep, walk it back. Rebuild your savings. Maybe scale back to one trip a year instead of two. Carry that behavior forward. You’re human. You’ll make mistakes. But if you keep repeating them, that’s when you need help.”

A card with a 0% interest promotion can help you save on interest while paying down a balance. But keep in mind that the card’s interest rate will go back up to its standard level once the promotion is over, and you’ll owe interest on any remaining debt. Use no-interest promotions as a way to get out of debt at a lower cost, not as an invitation to borrow more than you can handle.

A different spin on the idea of budgeting can give you permission to splurge while still knowing you’re saving enough. Malani refers to it as finding the “magic number” you can spend guilt-free. To calculate it, take your monthly income and subtract any savings goals (such as retirement contributions, a down payment, money for travel and holiday gifts). You can spend what’s left however you’d like.

“If your ‘magic number’ says you’ve got $20 left for the month, it’s a Netflix and pizza night,” Malani said. “If you’ve got $200, treat yourself or pick up the tab for friends.”