If only there was a warning bell that sounded whenever you were starting to accumulate too much credit card debt. You’d be able to stop using your credit cards and focus on paying them off before debt got too high.
While there isn’t an obvious, in-your-face type of way to tell whether you have too much credit card debt, there are some signs to let you know it’s time to change your credit card spending habits. Think about how you’re currently using your credit cards as you read through this list. If any of these things apply, you may be in trouble with credit card debt.
1. Your debt-to-income ratio is high.
Numbers don’t lie. Your debt-to-income ratio indicates the amount of your monthly income that goes toward credit card debt payments. To figure out your debt-to-income ratio add up the amount you spend each month on credit card payments and divide it by your monthly income. If the number is above 10%, then you have too much credit card debt.
2. You always make the minimum credit card payment.
Making the minimum payment lengthens the amount of time it takes to pay off your credit card debt. Not only that, it increases the amount of interest you ultimately pay. If you can only afford to pay the minimum amount due on your credit cards, then you have too much credit card debt. To raise your monthly payment amount, you’ll have to cut back in other places. That way, you can afford to pay off your credit cards and get rid of credit card debt.
3. You frequently use balance transfers to avoid making credit card payments.
Balance transfers are a good way to take advantage of better credit card terms, like a lower interest rate. However, they’re not designed to help you skip out on your credit card payments. If you’re transferring credit card balances to keep from having to make a payment on your credit card, you probably have too much debt. And if you don’t already have more debt than you can handle, you will soon as the balance transfer fees make your credit card balances go up
4. One or more of your credit cards is maxed out.
Maxing out your credit card happens when you charge your credit to the maximum credit card limit. This is never a good idea because it hurts your credit score. Not only that, maxed out credit card balances are more difficult to repay. Several maxed out credit cards are surely a sign that you have too much credit card debt. The only good thing about a maxed out credit card is that your balance can’t go any higher, so you won’t continue to loan yourself with more debt than you can handle.
5. You’ve been turned down a loan because your credit card balances are too high.
Banks don’t want to loan money to you if you have too much credit card debt because, chances are, you won’t be able to repay what you’ve borrowed. The bank may not immediately tell you you’ve been turned down because you have too much credit card debt. Instead, they’re required to send you a letter letting you know the reason you’ve been turned down. If the letter indicates you were denied because your credit card balances are too high, there you have it.
6. You don’t know how much credit card debt you have.
As their credit card balances rise out of control, many people go into denial about how much credit card debt they have. If you avoid adding up your credit card balances because you’re afraid of the truth, there’s a good chance you have more credit card debt than you can handle. But, when it comes to credit card debt, ignorance is not bliss. The sooner you face your true credit card debt, the better.
7. You can’t afford to pay your balance in full every month.
The best way to avoid credit card debt is to pay off your credit card balances every month. That way, you never have to deal with credit card debt. If your balances are too high to pay off every month, you have too much credit card debt. When you make credit card purchases, remember to keep them at a level that you can easily repay when your credit card statement that comes. That way, you avoid the lingering balance that can become credit card debt.
8. You lie to friends, family, and your spouse about how much you’re spending with your credit cards.
People with credit card debt not only lie to themselves, they also lie to the people around them about how much credit card debt they have. If you find yourself taking extreme measures to keep people from finding out about your credit card habits, you may have too much credit card debt.
Facing Your Credit Card Debt
The first step to dealing with credit card debt is acknowledging that you have it. Sit down and add up your credit card balances, so you know how much debt you actually have. Then, make the decision to stop using your credit cards. That way your credit card debt won’t keep going up. Finally, start paying back your credit card debt. You may have to reduce your spending in other areas, but it’s worth it if it means you’ll finally be rid of credit card debt.
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