How Much Credit Card Debt Is Too Much?
Almost everyone uses credit cards, and almost everyone has an opinion about what constitutes safe or dangerous credit card use. The more money you have, the more choice you have about what to pay for with credit cards and when to use other sources of funding; likewise, the higher your income and the greater the value of your assets, the easier it is to get access to credit. Therefore, if people are scolding you about your credit card use, they are probably either in denial about their own financial problems or else being smug about their privilege. If you are using credit cards in an excessively risky way, it is a symptom, not the cause of a problem. The solution is not simply to cut up your credit cards and go on a cash only diet and reduce your spending even more than you already have. Borrowing can be good if your goal is to qualify for a home mortgage or a business loan. Instead, you should address the underlying causes of your debt problem, namely predatory loans that you took out to pay for necessities or surprise medical bills that left you on the hook for thousands of dollars beyond what your insurance covers. The solution might be to consolidate your debt, file for bankruptcy protection, or negotiate with creditors to settle your debts for an affordable amount. If you are in trouble with credit card debt, a Miami debt lawyer can help you get out.
Credit Card Debt Red Flags
For most people, the concept of paying off your credit card balance in full each month is wishful thinking. If you are trying to reduce your debt burden, you are probably already paying as much as you can afford to pay toward your credit cards each month. These are some indications that credit cards are making your financial situation worse and is making it more difficult for you to access additional credit:
- Your credit utilization ratio is higher than 30 percent, which means that your credit card balance is more than 30 percent of your credit limit.
- The total of your monthly minimum payments on all your debts (for example, home mortgage, car loan, student loans, and credit card payments) is more than 43 percent of your monthly income.
- Your monthly minimum credit card payments are more than 10 percent of your monthly income.
- One or more of your credit cards is maxed out.
- You have taken cash advances on your credit cards.
If your credit card use is in the zone where it is making it harder for you to qualify for loans, do not despair. The solution could be as simple as getting a credit card or personal loan with a lower interest rate, if that option is available. If that does not work, a debt lawyer can help you find another solution to your debt problems.
Contact a South Florida Debt Lawyer About Credit Card Debt
A debt lawyer can help you find a long-term solution to your credit card debt. Contact Nowack & Olson, PLLC in Miami, Florida to discuss your case.