Signs Your Credit Card Debt Is Out of Hand

Maxed out credit cards are a burden to anyone. Considering that there’s little to no credit available, the card cannot be used for emergencies. Additionally, the high balances can significantly impact credit scores and the accumulated debt can easily become unmanageable, especially as high-interest rates make it difficult to pay off the debt.

But how can one know if a credit card debt is simply out of control? Here are some telltale signs:

Only the Minimum Payment Is Paid Every Month

If a person can only pay the lowest amount allowed every month and the card is still used after those payments, it means the debt is getting out of hand. Minimum payments do keep the account holder in good standing, but that is not enough to reduce one’s credit card debts.

Payments Are Late or Often Missed

Missed payments can further hurt one’s credit health. Late fees will increase the amount that needs to be paid and if the card is already maxed out, then those late fees could push the balance over the card limit. 

Other Loans Are Needed to Pay Credit Card Debts

If the credit card owner has to take other forms of debts like payday loans, cash advances, and the like, it could be a clear sign that the credit card debt is already too much to handle. However, it’s important to remember that doing so could mean even more debt that would be even harder to pay.

Credit Card Is Used For Almost All Purchases

While credit cards are indeed a convenient way to pay for daily necessities, and often the reward points and cash back offers are really good, relying on credit cards for almost all purchases can be a sign of financial trouble. 

Credit Score Is Slowly Dropping

If the total credit card debt exceeds 30% of the total available credit, it can significantly impact the person’s credit score. The ratio accounts for 30% of the total credit score, which means, if the credit limit for all the cards combined is $5000 the combined balances should not be beyond $1,500.

New Credit Card Applications Are Denied

If a person applies for a new credit card and gets denied, it can be a sign that high credit card balances are the reason. Credit card issuers can tell if a credit card debt is going out of control, often even before the card holders do. Check the letter from the credit card issuer to see why the application was denied and if high credit card balances are among the reasons, it’s time to rein in the use of the card and start paying off the debt before things get worse. 

It’s Hard to Save Any Money

The more money goes to debt payments, the less one has for more important things, like savings. However, without savings, one typically ends up deeper in debt to get out of financial binds. Anyone who doesn’t have savings because of the huge amount of money that goes into debt payment should seriously consider trying better strategies to tackle debt.

Credit Cards Are Maxed About

If the balance isn’t paid in full every month, a card can easily be maxed out. If the balances go beyond the limits, card issuers can raise interest rates, which makes it even more difficult for the card owner to pay the balance. 

Conclusion

Recognizing the signs that credit card debts are out of control is crucial for financial well-being. The earlier that these signs are identified, the easier it is to take corrective steps to manage the debt.

One of the best things to do to tackle huge credit card debts is to seek the advice of Debt Helpers. Composed of seasoned debt consultants in Canada, DebtHelpers.ca can help you determine the best strategies so you can be debt-free soon. Schedule a meeting with our debt consultants today!