10 Signs Your Credit Card Debt Is Out of Control
It’s so easy for credit card debt to get out of control
One day you’re happily swiping your credit card, buying things you’ve always wanted, taking trips to places you’ve always wanted to visit. The next thing you know your cards are all maxed out and you can’t quite remember how it happened.
There’s no gauge to let you know when your credit card debt is getting out of control.
Your credit card issuers aren’t going to warn you that your balances are more than you can afford to pay. Instead, it’s up to you to have to watch for these 10 signs that show that your debt is out of control:
1. Your cards are maxed out or above the credit limit.
Maxed out credit cards are a sign that you haven’t been paying your balance in full each month. Multiple maxed out credit cards only compound the problem, making it more difficult to pay off your credit card balances. And if you don’t have emergency savings, you left without a source of funding for an emergency.
2. You can’t afford to pay anything except the minimum payment.
The exact amount of debt that counts as “out of control” will vary from person to person depending on their ability to pay. A sure sign that your debt is out of control is being able to pay only the minimum on your credit cards. Minimum payments are the lowest amount you can pay on your credit card and keep your account in good standing.
If you can’t pay more than that and you’re still using your credit cards, your debt is getting worse each month.
3. You’re late or missing payments.
Once your minimum payments become unaffordable, you’re in trouble. Missed credit card payments only make your credit card situation worse. Late payments increase the amount you have to pay to get caught up and have a negative impact on your credit score.
By the time you miss two payments, your interest rate increases and catching up is almost impossible. The moment it starts getting hard to make your minimum payment is when you need to start making big change to your credit card habits. Or Call Y2kcreditSolutions for a free consultation on how to get a hand on the situation.
4. You’re paying your credit cards with other types of debt.
If you’re using cash advances, repeated balance transfers, payday loans or any other form of debt to pay your credit cards, you’re in big trouble. Not only are you not really making any progress paying off your credit cards, you’re creating more debt by borrowing money to stay afloat.
5. You’re using credit cards for necessities and everyday purchases.
Having to use your credit card for regular purchases is a sign that, not only is your credit card debt out of control, it’s a sign of bigger financial problems. If you continue using your credit cards for regular purchases—and it’s not part of a strategy to earn more credit card rewards—eventually you’ll run out of available credit. You’ll have to make big changes to avoid completely drowning in debt.
6. Your credit score starts dropping.
Credit scores are used to gauge your creditworthiness—or how likely it is that you will default on your credit and loan obligations. The amount of debt you’re carrying (compared to your credit limits) is 30% of your credit score.
If your credit score is falling even though you’re making your payments on time each month, it’s sign that your growing credit card debt is worse than you expected. If you don’t get a free credit score with your credit card statement each month, you can check your credit score for free though CreditKarma.com, CreditSesame.com. Please keep in mind that third party site are never going to be a 100% accurate with the data and scores they are reporting. This is just a guideline.
7. Your new applications are denied.
Credit card issuers may be able to predict that your credit card debt is out control even before you do. After a denied credit card application, check your mail for a letter from the credit card issuer explaining why you were denied. If your debt or high credit card balances is one of the reasons, it’s a sign that you need to rein in your spending and start tackling your debt before it gets worse.
8. You’re hiding your debt—from yourself or your spouse.
Feeling like you have something to hide is a sign that things are wrong. If you’re not opening your credit card statements because you don’t want to face your balances or you’re going out of your way to keep your spouse from finding out about your debt, you likely have more debt than you can deal with.
9. You can’t afford to save money because you have too much debt.
The more money you spend on your debt, the less you have for other things—like saving money. Without access to savings, for example in an emergency, you may have to create even more debt to get out of a financial bind.
10. You worry about how you’re going to pay off your credit cards.
If you felt like your credit card debt was under control, you’d have nothing to worry about. However, stressing about your credit card debt is a sign that it’s definitely out of control. Don’t assume that because you’re not stressed about your debt that you’re safe. It could be that you’re ignoring your debt or in denial about just how bad it really is.
Do you fit in one of these 10 scenarios? We can help.
Give us a call at (877) 552-1377 or (516) 568-4541.