3 Red Flags That You're Headed for Credit Card Debt

Another month, another credit card bill. This time, you can’t even bring yourself to tear open the envelope because you already know what it says: You owe more money. Just the thought of paying it fills you with dread, which should be enough of a sign to show there’s a problem.

Here are some other red flags that indicate your credit card debt is spiraling out of control.

1. Default Rates Have Kicked In

When you skip a few payments and wind up being slapped with a higher APR — think 12% jumping to 28% — something’s gone very wrong. Not only will the higher interest inflate your balance, you’ll have a harder time making minimum payments so the debt will take longer to pay off. (Try using this lifetime cost of debt calculator to see what that looks like.)

2. Credit Limits Were Maxed Out — Or Lowered

You’ve been paying your bills on time, but that didn’t stop your creditor from lowering your available credit just to push you to pay your debt sooner. Worse still, this is dinging your credit score, because credit utilization — that is, your total credit card debt versus your available limits — is one of the key factors agencies use to calculate your score. Now that you’re bumping up against your cards’ limits, your credit’s at risk of taking a nosedive, which will only weigh down your finances more.

3. Emotions Are Running High

Sometimes you don’t need to look at the numbers to know you’re drowning in credit card debt. Paying off debt is stressful enough, but lately you’re losing sleep, avoiding your bills and experiencing panic attacks. It’s time to get help.

Settling Your Debt

Alleviating your stress is one reason to pay off your credit card debt; lowering your credit utilization is another. That’s because a high credit utilization can be a red flag to lenders that you’re at risk of getting overextended and missing a payment, which in turn zaps your credit. You can see where your credit utilization currently stands by viewing two of your credit scores for free on Credit.com.