If you have credit card debt, you are not alone. But what may seem like a normal amount of debt to you may actually be a signal that you are in trouble, even if debt collectors have not started contacting you yet.
The Motley Fool recently shared seven potential warning signs that it is time to rein in your credit card use. Here they are:
- One or more maxed-out credit cards.
- You use your credit card for virtually everything, because you don’t have the cash available even for small purchases.
- Your debt-to-income ratio is too high. There is no fixed rule about what a good ratio is, but lenders prefer that their borrowers pay no more than 28 percent of their income on their mortgage payment, and a maximum of 36 percent on total debt.
- You can’t make more than the minimum payments. Even if you stop using your credit card now, paying just the minimum means it can take years to pay off your debt. Paying late or missing payments are signs you are seriously in debt.
- You use a second credit card to pay off your first.
- You find yourself lying about the size of your debt to friends and family, even while you won’t admit to yourself that it’s too big.
There are options for people deep in credit card debt to take back control of their finances. Meanwhile, if a debt collector is harassing you, you may have a case for compensation under the federal Fair Debt Collection Practices Act.