How Much Credit Card Debt is Too Much?
Credit Card Debt Explained
Credit cards are definitely beneficial and useful for many consumers, but they have a dark side as well -- a dark side known as credit card debt. For some reason, many consumers just can’t tell when acceptable credit card debt crosses the line and becomes too much. If you’re not sure whether or not your credit card debt is out of hand, you’ll want to keep an eye out for these telltale signs.
Do You Miss Payments?
If you frequently miss payments or have to decide what credit cards to pay first, then you might have taken on more credit card debt than you can handle.Even if you can make your minimum payments, it doesn’t mean that you are financially okay. Your goal should be to pay more than the minimum when your credit card statement comes in. If you can’t do that, there’s something wrong.
Robbing Peter to Pay Paul
Taking a cash advance on one credit card to make a payment on another is a clear sign that you have more credit card debt than you can handle. If you’ve ever done this or considered doing this, it is probably a clear sign that you have more credit card debt than you can handle.
Where’s Your Income Going?
If your credit card debt occupies a large portion of your total annual income, then you probably have too much credit card debt. Add up the total amount of your credit card debt and compare it to your total annual income. Some people have credit card debt that equals 25% of their annual income, and that is definitely too high. Your total credit card debt really shouldn’t exceed 12 percent.
Don’t Know the Numbers?
A surprising number of consumers aren’t even sure how much credit card debt they have. If you’re not sure how much credit card debt you have, then you definitely have too much.
Comments
There was a point in my life where my credit card debt exceeded my income by about 100%. To only make matters worse I was paying one card with another and worrying about it. Now, I'm completely debt free, but it took years of discipline, and not buying anything I didn't desperately need.
Posted by: Debt Free | June 24, 2007 1:49 AM