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How Much Credit Card Debt Is Too Much?



In today’s fast-paced world, credit cards have become an indispensable financial tool for many. They offer convenience, rewards, and a safety net in times of unexpected expenses. However, as the saying goes, “With great power comes great responsibility.” It’s crucial to understand that accumulating credit card debt can lead to financial trouble if not managed wisely.

Understanding Credit Card Debt

Before we dive into the depths of credit card debt, let’s start with the basics. Credit card debt is the amount of money you owe to your credit card issuer. This debt accumulates when you use your credit card to make purchases, and you don’t pay off the full balance by the due date. The remaining balance incurs interest, which can quickly snowball if not addressed.

The Ideal Scenario: Zero Credit Card Debt

Ideally, the best amount of credit card debt to have is zero. Paying off your credit card balance in full every month ensures that you are not incurring any interest charges. This approach allows you to enjoy the benefits of credit cards, such as cashback rewards and purchase protection, without any downside.

Signs That You May Have Too Much Credit Card Debt

  1. High Credit Utilization: Credit utilization is the percentage of your available credit that you’re using. A high utilization rate (above 30%) can negatively impact your credit score and indicate that you may have too much debt relative to your credit limit.
  2. Minimum Payments Only: If you find yourself making only the minimum monthly payments on your credit cards, it’s a sign that you may be carrying too much debt. Minimum payments often only cover the interest, leaving the principal balance untouched.
  3. Difficulty Meeting Other Financial Goals: If your credit card debt is preventing you from saving, investing, or achieving other financial goals, it’s a clear indicator that your debt load is too heavy.
  4. Credit Score Decline: A drop in your credit score can result from high credit card balances. Lenders view this as a risk factor, which can affect your ability to secure favorable loans or credit in the future.
  5. Stress and Anxiety: High levels of credit card debt can take a toll on your mental health. If you find yourself constantly stressed about your financial situation, it’s a strong signal that you need to address your debt.

Determining Your Debt Threshold

The appropriate amount of credit card debt varies from person to person based on individual financial circumstances. To determine your debt threshold, consider the following factors:

1. Income and Expenses

Evaluate your monthly income and expenses. Your debt should not exceed what you can comfortably pay off each month without sacrificing necessities or accumulating high-interest charges.

2. Debt-to-Income Ratio

Calculate your debt-to-income ratio (DTI), which is your total monthly debt payments divided by your monthly gross income. A DTI above 36% is often considered a red flag, indicating excessive debt.

3. Credit Score

Monitor your credit score regularly. A good credit score is essential for obtaining favorable terms on loans and credit cards. High credit card debt can negatively impact your score.

4. Financial Goals

Consider your short-term and long-term financial goals. Your debt load should not hinder your ability to save, invest, or achieve these goals.

5. Emergency Fund

Maintain an emergency fund to cover unexpected expenses. Relying on credit cards for emergencies may indicate that you don’t have enough savings.

Tips for Managing Credit Card Debt

  1. Budget Wisely: Create a budget that allows you to allocate funds for both essential expenses and debt repayment.
  2. Pay More Than the Minimum: Whenever possible, pay more than the minimum monthly payment to reduce your debt faster.
  3. Consolidate and Negotiate: Consider debt consolidation or negotiating lower interest rates with your credit card issuer to make repayment more manageable.
  4. Seek Professional Help: If your debt becomes unmanageable, consult a financial advisor or credit counseling agency for guidance.

How much is too much credit card debt?

My mother is horrified that I usually have around $10,000 in balances on two credit cards plus several department store cards. But I make more than $100,000 a year, which is a lot more than my father made during any year he was working.

My father died last year, leaving my mom very little money but also no debt. He never owned a credit card, and my mom never worked. So I think she just doesn’t understand how the world works today, and that everyone has “too much credit card debt.” How do I convince her I’m doing OK?

— Karen in Vermont

Howard Dvorkin CPA answers…

You’re right about one thing, Karen: Debt is how the world works today.

Sadly, 77 million Americans — that’s 35 percent of all adults with a credit file — have a debt that’s gone into collections.

I’m not so sure I can back you up on everything else.

That $10,000 in credit card debt represents 10 percent of your income. If you consider that your debt-to-income ratio should be under 15 percent, you’re pushing it. Do you have a car loan? Student loans? You didn’t mention these in your question above, so I’d suggest you use our Debt to Income Ratio Calculator to learn this crucial stat.

If your DTI exceeds 15 percent, then your mother is right: Your credit card debt is a problem. Regardless, I’m still concerned even if you have no other debts.

As a financial counselor for more than two decades, I’ve seen millionaires flying high and then hitting bottom. You can’t guarantee you’re always going to earn six figures. If you get laid off, Karen, do you have an emergency fund to pay your bills for 3-6 months?

Are you saving for retirement? As I’ve written before, the best way to save for retirement is to retire your debts. The interest you save is free money.

I strongly urge you to read our step-by-step guide to get out of debt. It’s free and so is the advice. However, if you don’t have the time, you can always give us a call. has certified credit counselors who can provide you a free debt analysis, and you can decide from there who’s right – you or your mom. Call us at 1-888-503-5563.



Can I have credit card debt and still have a good credit score?


Yes, you can have some credit card debt and maintain a good credit score as long as your credit utilization remains low, and you make timely payments.
Learn more about how to maintain a good credit score


What is the difference between good debt and bad debt when it comes to credit cards?


Good debt may include using credit cards for investments or education, while bad debt typically involves using credit cards for unnecessary expenses or non-essential purchases.
Learn more about good debt and bad debt can vary.


How can I negotiate lower interest rates with my credit card issuer?


To negotiate lower interest rates, contact your credit card issuer, explain your situation, and politely request a rate reduction. Having a good payment history can strengthen your negotiation position.
Learn more about how to negotiate lower interest rates.


What are the consequences of defaulting on credit card debt?


Defaulting on credit card debt can lead to damaged credit, collection actions, and potential legal consequences. It’s crucial to communicate with your issuer if you’re facing financial hardship.
Learn more about the consequences of missing payments and going into default.


How can I build an emergency fund to avoid relying on credit cards for unexpected expenses?


Start by setting aside a portion of your income regularly. Aim to save at least three to six months’ worth of living expenses in your emergency fund for peace of mind.
Learn more about how to build an emergency fund.

In conclusion, there is no one-size-fits-all answer to the question, “How much credit card debt is too much?” It ultimately depends on your individual financial situation and goals. However, it’s essential to monitor your debt levels, make responsible financial decisions, and prioritize paying down your credit card balances to achieve a healthy financial future.

Is credit card debt keeping you from success? Learn how to get your debt under control.

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