collaborative post // It’s almost a tightrope effect: on one hand, our society practically demands that we have credit cards, which we also must use, at least occasionally, to allow issuers to gauge how financially responsible we are. On the other hand, using plastic too much is not good, either.

And amid all that, many of us frequently get offers for more credit cards, so that we can take on even more debt and pay even more interest.

It can be lot to figure out.

However, there are ways you can know when you have too much credit card debt. Here they are – and more.

The Issue

A recent Federal Reserve report puts the average credit card debt for U.S. households at $6,300. It’s no secret as to why: credit cards are convenient and easy to use. But understanding when credit card debt is out of hand, and knowing when to get help, are key to gaining financial freedom.

The Fallout from Credit Card Debt

Here are some of the consequences of credit card debt:

  • You could be sued. If you’ve gone too long without paying on your credit card, the issuer may ultimately write it off as a loss. Collectors may then become involved and could wind up suing you. That could result in your earnings being garnished or having a lien placed on your property.
  • Inability to get more credit. If you don’t clear your debts, you’re going to have trouble getting more credit. That can affect your ability to get a mortgage or vehicle loan.
  • Lower credit scores. The more you use your cards, and the closer you creep toward your credit limits, the more your credit utilization ratio increases – and your credit score tumbles.
  • Ever-increasing debt. It sure is easy to rack up that debt, isn’t it? The problem is that the next thing you know, your minimum payments will become difficult to manage.

How to Know When You Have Excessive Credit Card Debt

The following are signs that you have too much credit card debt. If your situation is already acute, you can get relief at

  • You’re using cash advances. Many card companies allow you to present your card at a bank and get a cash advance. Such advances really are high-interest, short-term loans and come with a number of fees. Moreover, the interest rates will often be higher than those to which you’re subject when making typical purchases. Getting a cash advance is a sure sign that you’re running low on cash.
  • You’re maxing out your plastic. Ideally, your credit utilization is kept under 30 percent. Thus, gobbling up all your available credit damages your credit score and renders clearing your obligations much more difficult. Your minimum payments will become larger, and a diminished credit score translates to fewer debt resolution options, except debt settlement with freedom debt financial.
  • Your credit card debt ratio increases. It’s recommended that your credit card debt ratio stays at around 10 percent. If your credit card payments are taking up a big chunk of your monthly earnings, you have excessive credit card debt.
  • You have a high debt-to-income ratio. This is your monthly income compared to how much you shell out monthly on debts. Try to keep your DTI under 35 percent. Many lenders won’t even consider borrowers whose DTI is above 43 percent.
  • Your credit utilization ratio increases. If your credit utilization ratio is getting up there, it means you’re using more of your available credit than lenders would like. Aim for a credit utilization of under 30 percent.

Knowledge is indeed power. So, if you know you have too much credit card debt, you can do something about it – before your debts overtake you.

1 Comment

  1. Yikes I got nipped by credit card debt – thankfully it wasn’t as bad as it could have been – $6,000 and I’ve been making monthly payments. I’ll be locked into paying $200/month just on that alone, which sucks, but it’s such a good lesson and I won’t abuse my credit card again, when I get one in the future. I live pretty simply, but sadly it came in handy during the pandemic when work hours were few. Great blog post! It’s helpful to spread awareness about the harm of debt.

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