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How Much is Too Much Credit Card Debt?

Epic Loans Editorial Team

How Much is Too Much Credit Card Debt

Credit cards simplify the management of daily expenses. While multiple credit cards give you the liberty to follow your desired lifestyle, managing multiple cards can drive you to the trenches. Zero debt sounds safer than having debt at all, but it does not serve the purpose of building a good credit score and gaining lenders’ trust for future borrowings. So, what is a safe debt obligation? That brings you to the question: How much is a lot of credit card debt?

Your financial planning might be spot on, but things don’t always go as planned. The pressures of certain exigencies or habits of overspending can set you back on your financial goals. Non-payment or delayed payments lead to increased credit card debt with rising penalties and interest rates. If you are in a similar situation, let us understand the scenario and work a way out.

How can I Maintain Manageable Credit Card Debt?

The easiest approach for managing your credit card debt is focusing on your credit utilization ratio. It signifies the total amount of credit used against the total amount of credit available across all the accounts.

The credit utilization ratio is calculated as the sum of the credit limit of all the credit cards, called the total credit limit. Once you have calculated the total credit limit, add the balances of all the credit cards and find the ratio of total balances and total credit limit.

A result higher than 30% indicates what is considered bad credit card debt. To meet timely debt obligations, many financial experts suggest keeping the ratio between 1% and 10%, while a ratio between 11% and 30% is generally considered good. In many cases, the ideal percentage fails to cater to the credit card users’ needs.

Signs You Have Too Much Credit Card Debt

It is important to strike a balance between convenience and responsible financial management. Accumulating more credit card debt than is healthy for your financial well-being could upset many aspects of one’s life. Recognizing the subtle warning signals early can help you take the necessary steps to regain control of your finances.

Credit Utilization Ratio

A credit utilization ratio below 30% is ideal for managing debts. If the total credit limit is $10,000, then your lender expects you to keep the balance below $3,000. Anything above creates a potentially difficult financial situation in terms of both repayment and an increase in interest payable.

Maxing Out Credit Cards

Borrowing to the maximum limit of your card puts you in too much of a credit card debt. This makes paying off debt difficult by increasing the minimum payment amount. It also affects your credit score, reducing your chances of credit limit increase and other options.

Utilizing Credit Cards for Cash Advances

If you are thinking of cash advances as a quick solution to your debt repayment problem, you might end up opening a can of worms. Cash advances are short-term loans that come with high interest rates and fees that could be heavy on your pocket. A better approach would be to go for debt consolidation.

Making Only Minimum Payments Every Month

If you already know how much credit card debt is too much and you are standing on the threshold, you can pay the minimum amount each time. It keeps the account active, saving you from late fees and additional charges, but the interest keeps accruing, and credibility is surely hampered.

Outcomes of High Credit Card Debt

The consequences of too much credit card debt can affect your overall financial planning. Some of the immediate effects of high credit card debt are:

Heavy Interests

The obvious impact of high credit card debt is an increase in interest rates on the outstanding amount. The interest rates are variable and usually rise over time. This comes as an additional payment, adding to your monthly debt burden.

Trouble Qualifying for a New Loan or Credit Card

High credit card debt hampers your credit score, reducing the chances of further issuance of a loan or credit card. It negatively impacts the Debt-to-Income ratio (DTI) – a presentation of debt in proportion to income. A high DTI reduces the chances of credits at a discounted interest rate.

Damage to Credit Score

Another outcome of what is considered bad credit card debt is reduced credit scores. A bad credit card debt results in a high credit utilization, reflecting usage over ideal 30% or below. As the credit utilization increases, the credit score takes a dip.

How to Get Out Of/Pay Off Credit Card Debt

Though the situation looks daunting, you can overcome it with proper planning and a structured approach. Consider the following options to manage your credit card debt:

Make a Budget

Take note of your total income and expenses, including your monthly payments and interest on each credit card. This will help you prioritize your payments and cut down on unnecessary expenses.

Negotiate with Your Credit Card Company

If you anticipate a failure of payment, communicate with your credit card company. This shows concern for meeting your debts, helping you get time relaxation or coming to a mutually beneficial solution with the company.

Reprioritize Your Finances/Goals

Discuss your financial goals with your family to allocate the financial resources according to prioritized requirements. It reduces the chances of you getting into debt for goals that can wait.

Evaluate Different Debt Payoff Strategies

There are many strategies that you can apply to manage your debts, like the snowball method, debt consolidation loan, personal loan, and others. With their pros and cons, a debt consolidation expert can navigate you better through the situation.

Read More: How to Pay Off Credit Card Debt


Debt utilization higher than the ideal 30% shows bad credit card debt that could worsen the situation by increasing interest rates and lowering credibility. The consequences of credit card debts can be overcome by planning wisely, consulting professionals for credit card debt consolidation, and making an informed decision.

Epic Loans helps you manage your credit card debts by carefully evaluating your requirements and suggesting a solution that suits you the best. Our experts make the debt consolidation process easy for you so that you can meet your financial goals and support you when the rest say no.

Frequently Asked Questions

How should we manage credit card debt?

There are many ways to manage credit card debts. The easiest and most effective ones are budgeting, prioritizing financial goals, earning extra income, and consulting your credit card company and a debt consolidation professional.

How much is a lot of credit card debt?

A credit utilization of 30% or below is ideal for credit card debt. This percentage helps in paying off the debts in time and contributes to improving credit scores.

What does the debt-to-income ratio mean?

The debt-to-income ratio indicates the money spent on debt in comparison to income earned. A high ratio indicates more debt over the income earned. Lenders consider this ratio when approving a loan.