4 signs you have too much credit card debt

Stressed mother holds her baby at a desk with a calculator and laptop as she looks at credit card bills — 'Minimum payments are designed to keep you repaying your credit card balances — often at a high interest rate — over a long time'

(Image credit: Thana Prasongsin / Getty Images)

In an ideal world, you would never have any credit card debt. But sometimes you may end up carrying a balance, whether it’s because you recently made a large purchase or your finances were unexpectedly tight that month. There is a fine line, though, between a balance that is manageable and one that is potentially a problem.

If you are unsure whether you have crossed into troublesome territory, here are some telltale signs that will tip you off.

1) Your credit utilization is starting to affect your credit score

Your credit utilization reflects how much of your total credit you are currently using. If you have used up most of the amount available to you across your lines of credit, that “not only signals that you might be overextended, but it also actively damages your credit score,” said CBS News.

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Generally, “experts recommend a credit utilization below 30%,” or even lower, to avoid impacts on your score, said Yahoo Finance. Anything at or above that threshold “could mean your monthly debts are becoming burdensome.”

2) You can only afford to pay the minimum due each month

Struggling to pay any more than what you absolutely have to each month to avoid a late fee? That should sound an alarm.

“While occasional cash flow issues might force you to make one minimum payment here and there, a pattern hints at trouble,” said CBS News. It not only signals that you have racked up more debt than your budget can comfortably accommodate, but it can also trap you in a cycle of debt. The reality is, “minimum payments are designed to keep you repaying your credit card balances — often at a high interest rate — over a long time,” said U.S. News & World Report.

3) Your balance is not going down, even with regular payments

If you are “continually adding to your debt rather than making consistent progress on paying down the balances, you’re headed down the wrong path financially," said financial analyst Greg McBride to Bankrate. A steadily ballooning balance can signal that your credit card balance is part of a larger trend of overspending, rather than a one-time thing that you have a handle on.

Further, if your overall debt load compared to your earnings — known as your debt-to-income (DTI) ratio — creeps over 36%, it can be “difficult to pay off and can make accessing credit more challenging,” said NerdWallet.

4) You are neglecting other financial priorities due to your debt

If your other financial priorities, such as stocking your emergency fund and setting aside money for your retirement, have fallen to the wayside as you pour more and more into paying down your debt, that is a definite red flag. Credit cards can be a useful financial tool when used properly. However, “too much debt, and the wrong kind of debt, will stand in the way of making financial progress,” said McBride to Bankrate.

Becca Stanek has worked as an editor and writer in the personal finance space since 2017. She previously served as a deputy editor and later a managing editor overseeing investing and savings content at LendingTree and as an editor at the financial startup SmartAsset, where she focused on retirement- and financial-adviser-related content. Before that, Becca was a staff writer at The Week, primarily contributing to Speed Reads.