Credit card debt can be a scary thing if it gets out of control. If you’ve read our first five warning signs of a credit card debt problem, you know that you might have a problem if:
1. You make just the minimum payments.
2. You don’t know how much credit card debt you owe.
3. You ignore communication from creditors.
4. You charge more than you pay.
5. You use credit cards for essentials because you have no cash.
Still not sure? Here are five MORE warning signs that you credit card debt might be getting out of control…
6. You’re close to your credit limits.
Credit experts recommend keeping your credit utilization below 30%, both on each card and overall. Credit utilization refers to how much of your available credit that you’re actually using. If you’re using less than 30% of your balance on each credit card and less than 30% of your total available credit on all credit cards, you’re in relatively good shape. When you start creeping above 30% credit utilization, your credit score may start to drop. If you’re using over 50% of your available credit, you’re creeping into dangerous credit card debt territory. Once you’ve almost maxed out your limits—or have already maxed out your limits—you’re most likely in serious credit card debt. The exception to this rule is paying off each balance every month to cash in on rewards.
7. You’re dipping into savings to pay bills.
Your savings should be there to—well, save money. It should be only touched in extreme emergencies. If you have to dip into your savings once or twice to help pay a bill, it may not be a big deal. However, if you find yourself dipping into savings more than a few months out of the year, it could be a sign that you’re having credit card debt is getting out of control. This goes double if you’re dipping into retirement accounts!
8. You use one credit account to pay another.
While it’s true that you can’t usually directly pay one credit card with another credit card, there are ways around this. Cash advances from credit cards, which usually carry fees and higher interest charges, are sometimes used by desperate borrowers to make payments on other credit cards. While it wards off the late payments and past due fees temporarily, it also does nothing to help your credit card debt situation. All you’re doing in this case is putting yourself deeper into debt.
9. You’re making late payments.
Late payments on credit cards are no-no’s if you can avoid it! Not only will you get socked with late payment fees, but you could also end up with a negative marks on your credit reports. Never make late payments on your credit card, if you can avoid it! At the very least, make just the minimum payment. If you’re having trouble making even the minimum payment, it may be time to talk to a credit counselor.
10. You argue about or hide credit card debt.
Are you and your significant other constantly fighting about credit card debt? Do you work to keep your debt a secret from your loved ones—or, worse yet—your significant other? If so, it probably means that you have an out of control credit card debt roblem. It’s time to come clean to your significant other, if necessary, and come up with a plan to tackle the debt together.