Unfortunately, there is no big red warning light that will start flashing when your credit card debt begins to spiral out of your control. The card companies want you to spend more because it is more profitable for them if you spend, spend, spend.
Unfortunately, maxing out all of your cards probably won’t do you much good. So, if you want to stop your spending before it spirals out of control, look out for these tell-tale signs of a credit card problem:
You’ve Maxed Them Out
If your credit cards are maxed out, it could be a sign that you have either been overspending or paying off only the minimum each month. Neither of these situations is good and will lead to bigger and bigger interest payments as time goes by.
You Can Only Afford the Minimum Payment
How much debt is too much debt will vary from individual to individual, but if you can only afford to pay the minimum amount off your balance each month, chances are you have a problem. When you only pay the minimum, you’ll rack up huge amounts of interest that will only make you spiral deeper into debt.
You’ve Missed Payments
When the time comes that you can’t even afford to pay off the minimum balances on all your credit cards, you’re in trouble. Not only will your credit score suffer, but you’ll be charged for defaulting, and you could end up in dire straits.
You’re Using Credit to Pay Off Your Cards
If you’re using one type of debt to pay off another, whether they be payday loans, cash advances or loans, you might not be getting into trouble with your creditors yet, but you’re setting yourself up for even bigger problems in the future.
You’re Paying for the Essentials with Credit Cards
If you’re paying your bills with your credit cards and not paying them off at the end of the month, it’s a sure sign that your finances, not just your credit card spending, are out of control. If you keep using your credit cards for those important essentials out of necessity, it won’t be long before your cards are maxed out, and you have no way of paying them off.
Your Credit Score Starts to Fall
If your credit score starts to fall, it is a sure sign that you are not managing your debts as efficiently as you could because you are no longer a creditworthy candidate to the many financial institutions who use the score when making a decision.
What Can You Do About It?
When the warning signs are there, it’s time to ask yourself ‘how can I get my credit card debt under control?’ and ‘how to fix my credit score in six months.’ Hiring a professional debt management company is probably the simplest way to sort your finances out, but cutting your spending right back and drawing up a tight budget will also help.
The most important thing, when you notice your credit card debt is spiralling out of control, is not to stick your head in the sand and to tackle the situation head on. This is the only way you will be able to regain control of your finances.