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Americans are no strangers to credit card debt. In fact, the average American household has just over $10,000 in credit card debt, and the average interest rate is 17%.

The Dangers of Too Much Debt

Credit cards are useful tools for building up credit or helping you through a financial emergency. However, credit card debt has a tendency to quickly spiral out of control, leaving many people with debt they can no longer handle.

Too much debt can lead to a number of financial problems, including:

  • Lowered credit score. One of the determining factors of your credit score is the amount of credit you carry at any given time. The closer you are to your credit limit, the lower your score will be.
  • High interest payments. Credit cards make their money from interest, and few people truly understand how much money they end up paying in interest. For example, if you have a credit card with $10,000 on it and pay only the minimum payment each month, with an 18% interest rate you will spend a staggering $14,000 in interest by the time you pay your card off.
  • Limited purchasing options. If you carry excessive credit card debt, lenders are less likely to loan you money for more important, larger purchases like a home or a car because your chances of defaulting on your loan are higher.
  • Increased risk of fees. Credit card companies make millions a year on late fees and over limit fees. When you are juggling multiple credit card payments, one missed payment or just a few dollars over the limit can end up costing you hundreds of dollars.

Are You Headed for Credit Card Debt Trouble?

Excessive credit card debt doesn't happen overnight. These warning signs may mean you’re headed for credit card debt problems:

  • You have multiple cards at their limit. Maxed-out cards typically mean your spending is out of control.
  • You use your credit cards for everyday expenses. Using credit cards to pay for things like groceries or utilities could indicate you’re relying too much on cards.
  • You have missed payments or frequently make late payments. Not only does this mean you can't afford to make your payments on time, but it also means you’re paying money in fees.
  • You are only making minimum payments. Minimum payments are designed to ensure you have a balance on your card for years so you'll end up paying more money on interest over the life of your card. Online calculators such as the ones found at can help you see how much more you end up paying using minimum payments only.
  • You have no savings. Without savings, a financial setback or job loss could leave you nothing to fall back on except credit cards.
  • Your money problems are causing stress in your life. When your inability to make your payments is affecting your physical and mental health, relationships, and work life, it's time to take charge of your financial situation.

Taking Control of Your Finances

If any of these warning signs apply to you, now is the time to take action. Work to reign in your spending by lowering your reliance on credit cards. Work to pay off your cards by paying more than the minimum payment, budgeting, and not adding to credit card debt can all help. You can also consolidate your debt into one card, which results in one payment each month instead of multiple ones.

By working to pay off your debt and resisting the urge to use credit cards, you can take control of your finances.

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