The Danger Signs of Credit Card Debt

How to recognize dangerous credit card problems before they get out of control

Would you be able to recognize a serious credit card debt problem if you had one? Maybe you’re making your minimum monthly payments and you feel like you’re staying afloat, but it’s possible that you’re already in trouble. That’s because credit card debt problems often begin long before you start missing payments. If you happen to be treading water, you should be aware that a sudden wave – a medical emergency or perhaps a reduction in income – could sink you.

Let us throw you a lifesaver before you get in too deep. If you are showing any of the danger signs of a credit card debt problem provided below, call us at 1-888-294-3130 and let a trained credit counsellor analyze your finances and help determine your best course of action. If you’d rather start the assessment online, try our Free Debt Analysis.

The downward spiral

The longer you ignore your credit card debt, the bigger it grows. Each month, your debts are compounded by high interest. This means making minimum monthly payments will not get you out of debt any time soon; it could take decades. A lot of what you’re paying is going toward the rising interest, and less is going toward the actual principal (the original amount owed). Essentially, you’re paying your credit card company, not paying off your debts.

And then there are the special occasions. Birthdays, Halloween, Christmas, and travel put extra strain on household budgets and sometimes credit cards help bear the weight. A bigger balance will mean more money will be charged as interest and it will be harder and harder to pay it down.

Miss a few payments, and you’ll be hit with penalty fees and/or an increased penalty APR rate. Your debt troubles will have snowballed and soon enough, you won’t be able to keep up with your payments.

Know the warning signs

The scenario above paints a scary picture, but there are ways to prevent it from happening. Recognizing the danger signs early enough will allow you to make the necessary changes or seek credit help before things spiral out of control.

  • You might have a debt problem if:
    • You spend 15 per cent or more of your net income paying credit card debts. Experts agree that the number should be more like 10 per cent of your take-home pay.
    • Your income is already spoken for before payday. Living paycheque to paycheque means you probably need financial help.
    • You are dipping into savings or retirement funds to pay bills. The purpose of these accounts is to sit and grow so that you can depend on them in the future.
    • You only pay the minimum monthly payments on your credit card bills. Interest will eat most of it up and your balance will hardly move.
    • You have reached the credit limit on all of your credit cards. This is not the time to get another card; it’s the time to get help!
  • You definitely have a debt problem if:
    • You are picking and choosing between which bills will get paid this month.
    • You are paying one credit card bill, with a cash advance from another credit card.
    • You do without something you need because you have to use the money for bills.
    • You’re dodging collectors and screening phone calls to avoid your creditors.
    • You are stressed out and are loosing sleep because of debt and money troubles.
    • Money troubles are causing regular arguments in your home.
    • You’re asking friends or family to borrow money to pay bills.

If you are experiencing any of these warning signs, it’s time to call our trained credit counsellors to help you find a debt relief solution that’s right for your situation. Dialing 1-888-294-3130 or trying our Free Debt Analysis online will help stop a debt spiral in its path.