Americans today are carrying more credit card debt than ever before. Everyone you know has a lot of debt, but you’re wondering, do you have too much? Here’s how to know when to seek help.
1.) You’re only making the minimum payments on your credit cards.
If you’re making only the minimum payment on your cards, you could be tripling the total you pay over the course of your loan. With an interest rate of 18%, it will take you 24 years to pay off your debt. If the benefit of paying less each month seems greater than the cost of being in debt for more than two decades, you’re in financial trouble and need to get help.
2.) You’re at or near your limit on your credit cards.
Experts recommend you should use a maximum of 30% of the credit available to you. If you’re using more than that, you’re using too much credit. If your limits are low and you can pay your balances off quickly, you should do so to minimize the impact on your credit rating. If your balances are higher or you don’t know how you’re going to get them to a more manageable level, you should think about getting professional help.
3.) You don’t know how much you owe.
It seems like as soon as people start to see a problem with their credit situation, they stick their heads in the sand. You need to be aware of what your balances are. If you don’t know, either because you’re avoiding it or because you’re not very organized about it, you need to find out. If you’re pretty sure you don’t want to know the answer, that’s a big red flag.
4.) You have more than a couple of major credit cards.
It’s normal to have a Visa for when retailers don’t take MasterCard. It’s normal to have one major card that you keep for emergencies, while using your other card for more frequent purchases. It’s normal to have one rewards card at a higher rate than your other major credit card. But if you have numerous credit cards, you have to ask yourself why. If you need that much credit available, your finances are not in good shape.
5.) You’re paying for your day-to-day necessities with your credit cards.
Credit cards can be used for emergencies. They can be used for their rewards programs or insurance benefits. They can be used for high-ticket items when it wouldn’t make sense to pay cash. They shouldn’t be used for necessities. When you can’t afford to meet your day-to-day needs without using credit, that’s a major red flag that your finances aren’t under control.
6.) Your card has been declined.
Other than being hugely embarrassing, getting declined at the check-out is a bad sign. It means two things: you’re too close to your limit, and you’re not aware of what your balance is. Either way, it’s time to do something about that.
7.) You’re constantly transferring balances to lower interest credit cards.
Sometimes a balance transfer offer is too good to pass up, and if you’re paying a high rate of interest on your credit cards, transferring can be a good idea. But if you find yourself in a situation where you’re constantly switching cards, you’re probably not able to pay your debt off fast enough. If you can’t afford to make aggressive payments after taking advantage of a low rate balance transfer, you’re in trouble.
There are plenty of ways to get your credit card debt down to a more manageable level. If you’re noticing that the items on this list apply to you, consider taking action now.