NEW YORK (MainStreet) — While the use of credit cards is becoming more ubiquitous, consumers are relying too much on them, with one in five people who said they could not make ends meet otherwise.

A recent National Foundation for Credit Counseling (NFCC) online poll revealed that another 22% of respondents said that if they were forced to live by only using cash, they would have to make significant lifestyle changes. Only 32% of respondents said they would be fine, but would need to make some changes.

“Credit should be used as a convenience, not to supplement income,” said Gail Cunningham, spokesperson for the NFCC, the Washington, D.C.-based national nonprofit financial counseling organization. “It is a warning sign if a person is not able to manage his or her daily lifestyle without the use of credit cards, as this is a dangerous habit that could lead to serious financial distress.”

The amount of damage that can arise from the overuse of credit can be substantial. The average consumer who sought financial counseling from an NFCC member agency in 2013 had between five and six credit cards with the total amount of the unsecured debt equal to half of his annual household income.

“People may feel as though they have no alternative to using credit to supplement their income, but that is a dangerous habit that can lead to financial ruin,” she said.

Rising consumer debt continues to plague many Americans. Consumer credit rose by 9.75% in July compared to the previous year, according to the Federal Reserve. With the increase, total consumer debt excluding mortgage debt is projected at $3.238 trillion, which is $16 billion higher than the previous month, said Kevin Gallegos, vice president of Phoenix operations for Freedom Financial Network, a debt relief provider. This makes 32 consecutive months of record highs.

Revolving debt is also climbing. In July, total consumer revolving debt, which includes credit card debt, rose 7.4%. The total amount of revolving debt held by U.S. consumers was $880.5 billion or $5.3 billion higher than in June.

“Credit cards are not the problems,” he said. “They can be conveniences.”

The key is to charge only what you can pay off in full each month and never carry a balance, said Gallegos.

“Consumers need to remember that paying down credit card debt is one of the best investments they’ll ever make since the effective rate of return easily can approach 20%,” he said. “Having no credit card debt is a financial cushion.”

Consumers who only pay the minimum balance on their credit cards each month are “entering a financial danger zone,” Cunningham said.

A growing credit card balance is another sign that a consumer’s debt is becoming unmanageable as well as skipping monthly payments, paying late or making short payments.

Moving your debt around through the use of balance transfers, seeking cash advances, payday loans, title loans or other non-traditional credit, charging items that were previously paid for with cash or attempting to obtain new lines of credit since existing lines are near their limit are all indicators that a consumer is headed into serious credit problems.

“No one ever intentionally digs a deep financial hole, but breaking one of the basic rules of personal finance of spending more than you make is not likely to have a positive outcome,” Cunningham said. “Consumers seeking answers to their financial concerns would be well-served by reaching out to an NFCC member agency for free or low-cost financial counseling by finding an agency online at”

Paying off credit card balances in full and on time each month is one important component of living within a person’s means, said Gallegos.

“What really works is to live beneath your means so that you have the ability to accumulate savings,” he said.

Credit can be an important tool for consumers who are financially stable. The key is to know when and how to use it, Gallegos said.

The Power of the Plastic

It can be worth using a credit card when making a significant purchase such as electronics where you might need to take advantage of the extended warranty that sometimes is offered with a card.

Credit cards are a better alternative for online purchases since they offers greater protection against fraud. If you need to dispute a transaction, you can report it to the card issuer and are not liable for the charge until the dispute is resolved.

Credit cards can also help a consumer build a positive credit history. The responsible use of credit shows that you can manage and repay debt since debit cards do not help build a credit history.

“Build a credit score by making small purchases using a credit card and repaying the full balance on time every month,” he said.

--Written by Ellen Chang for MainStreet