There isn't a specific amount of credit card debt that's considered too much. Instead, it depends on your individual financial situation and how you're using your credit cards, Experian reports. U.S. consumers had an average total credit card balance of $6,501 as of the third quarter (Q3) of 2023, a 10% increase from the previous year. But again, having more or less than that isn't necessarily bad or good.
How much credit card debt is too much depends on the specifics of your personal financial situation. Reviewing how much interest accrues, the impact on your overall household bills and your credit utilization ratio can help you figure out how much credit card debt might be too much for your household.
You might have too much credit card debt if:
Some people might feel like any credit card debt is bad. If you feel that way and can avoid credit card debt, that's not necessarily a bad way to manage your finances. But consider a counterexample.
Say you need to borrow $10,000 for a pressing home repair. You have good credit and can qualify for a personal loan with a low interest rate and no origination fee. You also qualify for a credit card that has a promotional intro 0% APR on purchases for 15 months.
If you can afford to pay off the credit card balance in 15 months without paying any fees or interest, the credit card may be a better option than getting a loan. That assumes you don't add any more debt to the card and manage it responsibly once the large purchase is paid off.
Although there are a few exceptions, having a lot of credit card debt can generally be financially draining and mentally overwhelming. Some of the main consequences you might experience when you have too much credit card debt are:
You might be experiencing these repercussions, but there are options available if you're ready to get out of credit card debt.
It can be difficult to look over credit card statements when you know there's no way you can pay off the balance right away. But try not to be too hard on yourself or avoid thinking about your credit card debt.
Many people find a structured and strategic approach can help set them on a debt-free path. Here are a few steps you could take to start:
1. Evaluate Your Finances
Knowing where you're at can be important for creating a realistic timeline and implementing payoff strategies.
You can use your income and expenses to figure out your discretionary spending — how much you spend on nonessential purchases.
Using a budgeting app could also make calculating your income and expenses easier. But the point isn't to put yourself on a strict budget. You just want to figure out where you stand based on your actual spending.
2. Consider Why You're in Credit Card Debt
People end up in credit card debt for different reasons, and understanding these could be important for determining which debt-payoff strategy makes the most sense.
3. Compare Debt Payoff Strategies
Research and compare different strategies for paying off credit card debts. There are pros and cons to every approach, and some might not be realistic for you right now. But it's worth taking the time to understand your potential options.
4. Don't Go It Alone
Setting yourself up for success is important, but completely paying off credit card debt can take a lot of patience and perseverance.
You can use a credit card payoff calculator to find out how long it might take you to pay off your credit cards.
Example: If you have a credit card with a $6,000 balance and 25% APR, you'll have a minimum monthly payment around $185. Here's a look at how several options would affect how much you pay:
To maximize savings on interest you can get a balance transfer card with an intro 0% APR for 15 months and then a 25% standard APR. If there's a 3% balance transfer fee and you make $250 monthly payments, you'll pay off the balance in 26 months and pay about $490 in interest and fees.
Payoff timelines are estimates based on current interest rates and offers. You might qualify for better balance transfer card and loan offers as market rates change and your credit score increases, so it's worth monitoring your credit and revising your plan as you go.
This story was produced by Experian and reviewed and distributed by Stacker Media.