How do you know if you have too much debt? There are certain signs that indicate you might have a problem – and paramount to any debt relief plan is recognizing, and acknowledging, that you have this problem. If you can relate to any of the following signs and symptoms, you might have a problem and debt relief might be an option for you. The sooner you recognize these signs, the sooner you can take action, turn around your finances, and seek relief.
#1: You’re making minimum credit card payments
You might think that missing a credit card payment is the first sign that you are carrying too much debt, but if you are only making the minimum payments on your credit cards, month after month, this is an indication that you might have too much debt.
The problem with only making minimum payments is that you end up paying significantly more money overtime to pay off your debt. With high-interest rates on your credit cards, you are much better off paying down the balance, in full, every month.
#2: Your creditors are calling you
Have debt collectors begun to call you? When you miss your monthly payments and fall behind on your bills, your debts become delinquent and credit card companies or debt collectors start to call. This is a tell-tale sign that you are carrying too much debt.
#3: You’ve maxed out your credit cards
Have you maxed out one or more credit cards? In other words, are your credit cards at (or just below) the overall credit limit? This is another sign that you have run into trouble with your debt and probably are carrying too much. Not only does this indicate that you’ve taken on more than you can pay back, but maxing out your cards and reaching your limit also hurts your monthly credit score.
#4: You’ve applied for new lines of credit and been rejected
How much debt you owe is a major factor in determining your credit score. When you apply for new lines of credit, potential lenders look to your credit score to determine whether or not to extend the new credit. If you’ve been rejected from a new line of credit, a common reason is a low credit score or too much credit. This lender is worried that you are not going to be able to pay back the debt, so it won’t be willing to issue you a new line of credit.
#5: You’ve opened new credit cards to pay off existing ones
Opening a new card to pay off an existing debt is a band-aid strategy: While it might reduce one card’s debt for a moment, you are not reducing your total amount of debt so, in the end, this could be a sign of trouble. While there is value in transferring your balance to a lower interest rate card, beware of transfer fees and high-interest rates on the new card after an introductory offer period is over.
Your Debt Relief Options
Do any of these signs sound familiar? If so, you likely have too much debt and should consider your debt relief options. If it sounds too daunting to tackle this debt on your own, a reputable debt relief company can help you on your journey by evaluating your finances and guiding you as to whether credit card consolidation, debt consolidation, or even a debt settlement program is right for you.