How Much Credit Card Debt Is Bad?

Credit card debt is one of the most common forms of debt for Americans – in fact, more than half of all credit cardholders have credit card debt! And while other forms of debt, such as a mortgage or car payment, may be manageable, credit card debt, because of its high interest rates, can be one of the most difficult forms to pay off. But how much credit card debt is actually bad?

Everyone’s finances are different, and while some people may be able to pay higher credit card balances, the general rule of thumb for credit use is keeping it below 30% of the credit you have available. For example, for a credit card holder whose lines of credit total $3,000, they should only carry about $1,000 worth of credit card debt. However, just because you can carry that much debt doesn’t mean that you should.

Here are a couple of things to consider about determining how much debt is too much:

  • You can’t pay off the balance of the card each month if you can only make the minimum payment, then you’re spending too much money.
  • You feel stressed out about the credit card debt you have. If the amount of debt is stressing you out, then it’s time to reevaluate your budget and credit card usage.
  • You use credit cards for general living expenses, or to make up for what you can’t afford with your budget. If you’re relying on your credit cards to pay your monthly expenses, it’s time to reevaluate your overheard and income. Plus, you’re quickly building up high-interest debt without a way to pay it off.

Keeping Your Credit Card Spending Under Control

The first step towards responsible credit card spending is to set a monthly budget of your expenses, using just the income you bring into the home – not supplementing the expenses with a credit card. If you note that your expenses exceed your income, then it’s time to trim the fat from your budget. You may be able to trim yo entertainment expenditures, such as reducing take-out deliveries or limiting the streaming services you subscribe to, or cutting your grocery bill. However, you may need to generate more income, either by securing a higher-paying job or taking on a “side hustle.”

If you’ve analyzed your budget and cut expenses and are still overwhelmed by credit card debt, however, you may need the services of a professional credit counselor. A nonprofit credit management company is a great starting point. These agents represent their clients – you – to debtors, including credit card companies, and negotiate terms of settlement that may reduce the interest and balance of what you owe. Often, these agents will also work with you to establish a budget you can stick to, including budgeting for repayment plans for your credit cards.


So, much much credit card debt is bad? That depends on your individual financial situation and the income you bring into the home. Furthermore, having a large credit card balance may be manageable for some people, but if you’re considering buying a home in the near future, or even a car, it’s wise to try to pay off as much credit card debt as you can, boosting your credit score and making you look like a more reliable borrower to a mortgage bank. Knowing the warning signs of too much debt, and the implications for your financial health can make it easier to determine if you have too much debt.

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