With the convenience of using credit cards, it’s easy to fall into a cycle of accumulating more and more debt. But how much credit card debt is too much?

In 2022, credit card debt among Americans stood at a total of $910 billion, with each consumer carrying an average debt balance of $5,910.

Whether your own liabilities hover above or below this figure, the definition of “too much debt” depends on your unique financial circumstances.

What is credit card debt, and how does it work?

Credit card debt is one of the most common types of consumer debt in the United States. Simply put, this debt is the amount of money you owe to your credit card company.

It can accumulate when you use your credit card for purchases and make only the minimum payment when your monthly bill is due. If you carry a balance on your credit card, the lender will apply interest to your balance each month, and your balance will continue to grow.

Thanks to high interest rates — which reached an average annual percentage rate (APR) of 16.17% as of February 2022 — credit card debt can tally up fast.

Another way credit card debt can add up is through cash advances, especially since interest starts accruing immediately after the money is disbursed.

Plus, any fees or charges associated with your credit card, including annual fees and late payment fees, only increase your debt balance. You can generally avoid racking up credit card debt from interest by paying off your balance on time and in full each month.

What are the downsides of carrying credit card debt?

While there are many benefits to using credit cards, from collecting cash-back rewards to establishing creditworthiness for a home loan, there are also downsides.

Perhaps the most obvious consequence of credit card debt is financial strain. When you cannot make your monthly payments on time, you can end up with late fees, interest charges, damage to your credit score, and — in extreme cases — bankruptcy.

Interest and late payment fees can end up costing you a lot of money in the long run. In addition, carrying a high balance on your credit cards month to month could hurt your credit score over time, making it harder to get approved for loans or lines of credit in the future.

Beyond the financial ramifications, too much credit card debt can also take a toll on your mental and physical health. The stress of trying to manage your debt can contribute to anxiety, as well as problems sleeping and difficulty concentrating.

If you find yourself struggling with credit card debt, seek help sooner rather than later. There are many resources available to assist you in managing debt and getting your personal finances under control.

For instance, credit counseling services can assist you in developing a sustainable plan based on your income to pay off your debt. By taking action as soon as possible, you can avoid the repercussions of excessive credit card debt.

How much credit card debt is too much?

The criteria for excessive credit card debt may vary from person to person. It depends on a number of variables, including your income, expenses, ability to make payments, and overall financial health.

In general, though, credit card debt is considered too much when you are unable to pay off your full balance within a reasonable timeframe. This can happen for a variety of reasons, including job loss, medical bills, or simply overspending.

When you can no longer make on-time payments, your credit score can suffer, and — down the line — you may start receiving calls from debt collectors. One tell-tale sign of excessive credit card debt is when your credit utilization ratio is above 30%.

Your credit utilization is your total amount of debt divided by how much credit you have available. For example, if you have a $1,000 balance on a credit card with a $5,000 credit limit, your credit utilization ratio is 20%.

High credit utilization could hurt your credit score and decrease your chances of getting approved by lenders for new loans and credit cards.

Another approach to gauge your financial standing is to assess your debt-to-income ratio (DTI).

To calculate your DTI, add up all of your monthly debt payments and divide them by your gross monthly income. Say your income is $3,000 per month, and your expenses include a student loan payment of $1,000 and credit card payments of $500.

In this scenario, your DTI would be 1,500/3,000, which equals 50%. Many lenders typically prefer borrowers with a DTI of under 36% because it means you’re using less than half of your gross income to pay off debts.

The first step to improving your credit utilization or DTI is to figure out where you stand. You can use an online calculator or do the math yourself. Once you know your figures, you can work on ways to lower your DTI.

How can you pay off your credit card debt?

Credit card debt can feel like a never-ending cycle. Fortunately, if you’re facing challenges with eliminating your debt balance, there are a few ways that you can get back on track.

These include:

  • Working with a credit counseling service to create a payment plan.
  • Negotiating with your creditors to reduce interest rates or waive fees.
  • Consolidating your debt into a single line of credit with a lower interest rate.

A credit counseling service can help you establish a budget, reduce your debt, and improve your credit. Many credit counseling services are available on the market, so do your due diligence.

Choose one that is accredited by the Better Business Bureau and has experience helping individuals in your situation. When you meet with a counselor, be sure to ask about their fees and what services they provide.

Creating a budget is the first step to taking control of your finances. Your counselor will work with you to create a budget that fits your income and expenses.

What are some practical steps you can take to address debt?

After you have a budget in place, you can begin working on reducing your debt balance. There are several methods of paying off credit card debt, and your counselor can provide advice to help you figure out which is right for you.

One approach to debt reduction is to negotiate with your lenders to shrink interest rates or eliminate late fees. Contact your lenders directly and explain your financial situation.

Be honest about what you can afford to pay and ask for a lower interest rate or waived fees. If you have a good payment history with the creditor, they may be more likely to work with you.

Another option is to consolidate your debts into one monthly payment. This can be done with a personal loan or balance transfer credit card, which allows you to move your outstanding balance from one or more credit cards to a single card.

Most balance transfer credit cards offer an introductory period during which you’ll enjoy 0% APR on the transferred balance. This can last for several months to a year, giving you plenty of time to pay down your debt without accruing any additional interest charges.

Remember to make on-time payments each month, or you may lose the 0% intro APR. Plus, you could be responsible for paying interest on the entire balance at the card’s regular APR, which can be costly.

What are the most common approaches to debt repayment?

The downside to balance transfer credit cards is that lenders usually prefer applicants with high credit scores. This could pose a problem for individuals whose credit scores have taken a hit from carrying credit card debt from month to month.

When it comes to repayment strategies, both the snowball method and avalanche method are tried and true. The snowball method entails knocking out your smallest debts, while the avalanche method consists of paying off your debts with the highest interest rates first.

Snowball method

The main advantage of the snowball method is that it can help to motivate you by giving you a series of small wins. As you pay off each small debt, you may feel a sense of achievement that can help you to keep going.

A potential disadvantage of the snowball method is that it may not be the most financially savvy option. For example, if you have high-interest debts, you may end up owing more in interest over time by repaying them last.

However, some people find that the psychological benefits of this method outweigh the financial downsides.

Avalanche method

The avalanche method, on the other hand, is all about saving money in the long run. By targeting your high-interest debts first, you could pay less interest overall.

People who are disciplined enough to stick to their repayment plan tend to choose this approach, even when it means making bigger repayments in the short term.

The avalanche method can be difficult to stick to since it can take longer to see results, which can be discouraging for some.

Ultimately, there is no right or wrong answer when it comes to choosing between these approaches. You’ll have to evaluate your own personal circumstances to determine what will work best for your situation.

The bottom line on how much credit card debt is too much

Having too much credit card debt can be a tough burden to bear. Whether or not your credit card debt is considered excessive will come down to your personal finances.

Use the credit utilization rate and DTI as guidelines to figure out how much credit card debt is too much. If your debt is unmanageable, it may be helpful to speak with a financial professional who can help you assess your situation and create a plan for getting out of debt.

For more financial tips, head to our blog.


Average Consumer Debt Levels Increase in 2022 | Experian

What are the Different Types of Consumer Debt? | Equifax

How Will Rising Interest Rates Impact Credit Cards? | Experian

Debt Shame: Ways to Deal with Guilt & Anxiety Due to Debt | Experian

Managing Debt | consumer.gov

What is credit counseling? | Consumer Financial Protection Bureau

What is a debt-to-income ratio? | Consumer Financial Protection Bureau

Debt-to-Income Ratio | Experian

How to Negotiate Debts with Your Lenders | Equifax

Avalanche vs. Snowball: Which Repayment Strategy is Best? | Experian

Vital Card blog posts are intended for informational purposes only and should not be considered financial or any other type of advice.