How to Recognize the Danger Signs of Credit Card Debt

By Caitlin in Credit
How to Recognize the Danger Signs of Credit Card Debt

Recognizing credit card debt before it gets out of hand is extremely difficult and more often than not we only realize there’s a problem before it’s too late. If you currently have some credit card debt (the average person usually does) and are making the minimum payments each month, you probably aren’t too worried and feel like you’ve got everything under control. The problem is most issues with credit card debt start long before missed payments. Unfortunately having a significant amount of credit card debt lays the perfect foundation for other serious financial problems.

Think of it this way, if you’re just staying a-float now, what happens when there’s an emergency or you need to come up with a lot of money quick? You’ll probably neglect your credit card payments or start to charge even more to your cards. Then sooner than you think your credit card debt will start to spiral out of control and you will no longer be a-float, you’ll be sinking.

This is why we want you to be able to recognize the danger signs of credit card debt before it’s too late.

The Downward Spiral

The more you ignore your increasing credit card bills the more they will grow. Every month that goes by, even if you’ve stopped making purchases with them, your debt continues to be compounded by high interest rates. Even if you make the minimum payments on time each month and think that you’re keeping on top of your debts, it will still take you years to become debt free. The only function of a minimum payment is to continue to keep you in debt to your credit card company for as long as possible. This is where the downward spiral starts, getting sucked into the minimum payment trap.

Once you’ve been sucked into the minimum payment trap you’ll have trouble being able to afford anything else. This is how the downward spiral into deep credit card debt continues, when an unexpected expense or special occasion comes along. Birthdays and Holidays are expensive and often include travel, a costly meal or a gift. If you’re already having trouble paying off your credit cards then you probably don’t have any extra money to cover these expenses. So perhaps you’ll charge it all and forget about it. Then all of sudden your being charged more interest and you can’t afford to even make the minimum payment and you start to missed payments all together.

Unfortunately this is a scenario that happens far too often. Debt starts to snow ball and you, all of a sudden out of nowhere, have some serious credit card debt problems.

Some Warning Signs to Watch Out For

It’s scary we know, but we also know that you can prevent it by being aware of some of the warning signs and by taking control of your finances today. Here are some of the signs to look out for, once you’re better informed you’ll be able to take action as soon as you recognize an issue and hopefully prevent your debt from spiralling out of control.

  • If you’re currently spending more than 15% of your income on credit card bills, experts say that you should aim for less than 10%.
  • If you’re living from pay cheque to pay cheque and you already know where every dollar of your next pay cheque is going before you even get it.
  • If on a regular basis you need to dip into your retirement fund, emergency fund or saving account to pay for bills that your monthly income should cover.
  • If you can only afford to make the minimum payments on your credit card bills every month.
  • If you have several maxed out credit cards and need to get another one just to stay a-float.
  • You can’t affords too pay all of your bills each month and have to choose to not pay some of them.
  • If you’re paying off one credit card with another credit card.
  • You constantly have to go without something important like insurance, food or gas because you need to use all that money to pay your credit card bills.
  • You have creditors calling you on a daily basis and have to screen your calls because you don’t have their money.
  • You can’t sleep and have a hard time concentrating on anything else because you’re constantly thinking about your credit card debt.
  • If you’re debt issues are causing fights between you are your significant other, friends or family members.
  • If you need to ask your family members or friends to borrow money just so you can pay your bills.

You might feel like some of these warning signs are a bit extreme and that you’ll never let your credit card debt spiral out of control. But that’s the problem; most people don’t even realize it’s happening. We want you to be debt free, so keep an eye on your credit cards and take control of your finances.

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