How Much Credit Card Debt Is Too Much?

Credit card debt may not look like much when you first start using it. But if you’re not careful, that debt can snowball into something much larger and unmanageable.

So how do you know if your credit card debt has become too much? There’s no hard and fast rule for too much credit card debt since it depends on your financial situation.

However, you need to watch out for a few signs that indicate you may have too much debt.

A good indicator might be knowing how much Credit Card debt does Americans owe collectively.

According to, the average American household has over $9,000 in credit card debt. Let us dig further and understand how much credit card debt is too much for you.

How Much Credit Card Debt Is Too Much?

Key Takeaways

  • If you’re regularly using more than 30% of your credit limit, it’s a sign that you’re using excessive credit.
  • If you’re using cash advances or balance transfers to pay off your card debt, it’s a sign that you’re over your head.
  • Making a budget, creating a Debt Repayment plan, or consolidating your debt are good ways to get out of cc debt.

5 Signs You Have Too Much Credit Card Debt

5 Signs You Have Too Much Credit Card Debt

While CC debt isn’t always bad, it can become a problem if it’s not managed correctly. Here are five signs that indicate you have too much credit card debt:

You Have a High Credit Utilization Ratio

When it comes to card debt, your utilization ratio is one of the most important numbers to watch. This is simply the ratio of your total card debt to your total credit limit.

Ideally, your utilization ratio should be below 30% – and even lower if you can.

But if you’re regularly using more than 30% of your credit limit, it’s a sign that you’re using excessive credit and could be in danger of maxing out your cards.

Use this table to understand if you have too much debt.

Total credit limitMaximum debt that won’t decrease your credit score

Your Minimum Payments Are Becoming Difficult To Make

Another sign that you have too much credit card debt is if you’re having trouble making your minimum monthly payments.

If you can only make the minimum payment each month, it will take much longer to clear your debt, and you’ll end up paying a higher interest rate.

Plus, if you’re only making the minimum payment each month, you’re not making a dent in your overall debt. This can be irritating and might cause you to give up on getting out of debt.

Read: How To Negotiate Your Debt Settlement On Your Own?

You’re Using Cash Advances Or Balance Transfers To Pay Off Debt

If you’re using cash advances or balance transfers to pay off your card debt, it’s a sign that you’re over your head.

This is because these debt repayment methods usually come with high-interest rates and fees.

So, if you’re using them to pay off your debt, you’re not making a dent in your overall balance. Plus, you’re likely just digging yourself deeper into debt.

Credit card debt ratio 

You cannot check your debt-to-income ratio allt he time. However, there is a better way to check if you have too much credit card debt – Credit card debt ratio.

For this you simply divide your total monthly credit card payments by your total net monthly income.

In general, you should make sure that your minimum credit card payments do not exceed 10% of your income.

This is because if credit card payments takes up too much of your net income, then you will not have enough to run your home. Use this table to keep a track on your credi card debt ration:

Net monthly income (After taxes and other deductions)Highest balance you should carry


How Much Credit Card Debt Is Too Much?

How Much Credit Card Debt Is Too Much

There is no actual indicator of how much credit card debt is too much, as this can vary from person to person.

According to Experian, in 2022, the average consumer debt on credit cards was $5,589. For some people, this might be too much, while for others, it might not be a big thing.

A person’s income and way of living are the key determiners here. But at the end of the day, having no debts at all is always ideal as it offers financial freedom and peace of mind.

Your goal should always be to minimize the number of debts you accumulate. 2

How To Get Out Of Credit Card Debt?

How To Get Out Of Credit Card Debt

If your card debt has become unbearable, you can do a few things to clear your debt and improve your situation.

  • Make a Budget: One of the most effective ways to get out of debt is to create a budget and stick to it. This will help you see where your money is going and where you can cut back to free up some money for your debt.
  • Create a Debt Repayment Plan: Once you know how much money you have to work with each month, you can create a debt repayment plan. This will help you focus on paying off your debt and getting out of your home.
  • Consolidate Your Debt: If you have several debts with different interest rates, it may be helpful to consolidate your debt. This means taking out a new loan to pay off your other debts. This can be a good option if you qualify for a lower interest rate.
  • Get Your Balance Transferred: A lot of credit card companies offer 0% promotional APRs for new customers on balance transfers. So if you have too much credit card debt, then you can consolidate it onto a new card. However, balance transfers have a limit, and you can only transfer an amount up to the card’s credit limit. Also, the balance transfer requires you to pay an additional fee. Also, the cardholder should note that interest will start to incur once the promotional period ends and the balance is still not paid off. To decide if you should go with this option or not, do your calculations.
  • Apply for a Personal Loan: If you are looking for a less expensive option, then you can take a personal loan. The best thing is that the interest rate on personal loans is way lower than on credit cards. In fact, as per Federal Reserve data, the credit card interest rate on average was 18.43% in august 2022, while it was only 10.16% for a 24-month personal loan. If you do not have a good credit score, then you can ask a family member or a friend to be a co-signer which will reduce your interest rate even more. 3

Read Cheapest Way To Get Out Of Debt

Americans Tell Us How Much Credit Card Debt They Have

The Negative Impact Of Credit Card Debt

Negative Impact Of Credit Card Debt

People use their credit cards aimlessly for every little purchase they make.

They spend more than their pockets can allow, and before they know it, they accumulate a lot of credit card debt.

Here are some negative impacts of credit card debt that you should know about:

  • Can lead to wage garnishment: If you do not pay your debts on time, then the debt issuer can get a court order to garnish your wages. There will be a limit on how small amount they can deduct, but irrespective of the amount; you wouldn’t want to face such a thing as it may give rise to other financial difficulties.
  • Difficulty in obtaining other lines of credit: If you owe a lot of debt, then other lenders might also not trust you with their money leaving you no resort to get out of financial difficulty with external help.
  • Increasing debt: Credit cards incur interest on your credit card balance, and the higher the balance you have higher would be the interest. The more interest grows, the more your balance will grow. This will lead you to a complete spiral of debt.
  • Poor credit score: No matter what kind of debt you owe, not repaying it on time can plummet your credit score and increase your debt utilization ratio. This will make it difficult for you to take loans in the future.
  • You can go into collections: If you do not make minimum payments towards your credit card debt, then the issue may decide to sell your debt to a debt collection agency. If this happens, then your credit score will be affected severely, and you will be constantly troubled by the collections agency. 4

Bottom Line

Many people don’t realize how easy it is to get in over their heads with credit card debt. If you’re not careful, it can turn into a big problem.

But if you’re aware of the signs that you have too much debt, you can take steps to get out of debt and improve your financial situation using a credit card debt relief company.

Read: How Much Credit Card Debt Is Too Much?


Is there something called bad credit and good credit?

Yes, good credit could mean taking out loans to make more money, while bad credit means accumulating debts and using more loans to pay off your existing loans.

What is the average credit card debt in the United States?

The average credit card debt in America in the last quarter of 2022 was $4,285 to $6,617.

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