Credit card debt is a major problem for about 40 percent of card holders who struggle to make even minimum payments. According to Gary Weiss, credit counselor and author of “Don’t Get Clobbered by Credit Cards,” 60 percent of credit card holders pay on time.
Weiss and other credit counselors often note that the average household’s credit card debt was $9,840 in the year 2007, up from the $2,966 average in 1990. This increase is roughly double the rate of inflation.
The following are 10 signals of excessive credit card debt. If you see yourself in even one of these scenarios, the time has come to find a credit counselor.
1. Your credit card debt is climbing and your income isn’t keeping up
This can be understandable, so don’t be ashamed. The U.S. Department of Labor reports that job losses in 2008 will exceed 2 million, the highest in 34 years. This number doesn’t include people whose wages were frozen or reduced, or credit card holders who faced cuts in health insurance or suffered losses in the stock market.
2. You never exceed minimum payments on your credit card debt
Sometimes you can’t even reach the minimum payment. This is true with for the 11 percent of card holders who face the most severe credit card debt, according to the Experian-Gallup Personal Credit Index survey.
3. You’re “kiting” your debt
You are so deep in credit card debt that you are using cash advances from one credit card to make the minimum payments on other cards, a.k.a credit card kiting. Credit counselors say this mentality is similar to a gambler who believes a future successful bet will pay off a previous bad bet.
4. Your available credit is gone
You have maxed out your credit card debt on each of your cards, or you are close to doing so. The silver lining is that you will finally be forced to deal with minimum payments by finding a credit counselor.
5. Each month, you increase your credit card debt by more than you make in minimum payments
Your credit card debt becomes interest on the interest. A credit counselor knows how to negotiate better terms on your credit card debt.
6. You don’t know the exact amount of your credit card debt.
This can happen because you are able to pay but are careless, or you have fallen behind and you don’t want to deal with it. There is no better evidence that a credit counselor could help you.
7. Collectors are calling
You’re getting calls or letters to collect your credit card debt. You can only ignore them for so long. The sooner a credit counselor enters the picture, the better.
8. You use cards for necessities
You buy essentials, such as food or gasoline, which adds to your credit card debt. The problem is that if you fail to make minimum payments, you may eventually pay $30 for the milk and $20 for the bread.
9. You don’t have any cash
It’s all sunk into credit card debt. Actually, if you have major credit card debt, a credit counselor will tell you that you really shouldn’t have much cash, other than enough to pay for your essentials.
10. You are ashamed
You are hiding your credit card debt from your loved ones. You can’t hide credit card debt forever. Share the truth and consider this sharing to be a starting point. You may not want to hear this old bromide at this particular time, but a good credit counselor will tell you: “There’s more to life than money.”
