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Credit Card Debt Solution

How Much Credit Should You Have

Credit counselors often advise that you spend no more than 15% - 20% of your income after taxes on short-term (typically 12 months or less) credit purchases, such as credit cards and lines of credit (short-term credit does not include your housing costs). If your monthly income after taxes is $1,000 for example, you should have credit payments of no more than $150 - $200.

Warning Signs of Too Much Credit Debt
If you answer yes to any of the following questions, you might be heading into dangerous credit territory.

  • Do you need to use credit to buy everyday necessities like groceries?
  • Do you have to borrow money to pay your current bills?
  • Are you have trouble paying off your credit card balances each month?
  • Do you have difficulty saving enough to cover expected expenses?
  • Are your credit cards "maxed out" to their full limit so there is no room to cover emergency expenses?

Simple Solutions to Keep Your Credit Card Debt Down

  • Don't charge your purchases if you are unable to pay off your credit card bill.
    Paying cash or using a debit card is a great way to keep your credit card debt low. Adding charges onto a credit card that you cannot afford to pay off is a surefire way to get into debt over your head.
  • Don't borrow more than you need.
    While it would be nice to borrow extra money in order to afford more luxury items, it isn't the smartest idea when you're looking for a debt solution. Until you're more cogniscent of how much debt you can handle, only borrow the amount you need and are able to pay back.
  • Understand the costs of credit.
    Make sure you know what your interest rate is along with any other fees associated with each of your credit accounts, including late payment fees.
  • Shop around for the best deals.
    Interest rates, fees, and other payment rules vary widely. Make sure you do your homework and find a deal that fits into your budget. Some people prefer testing purchases in the physical stores, then purchasing the same product online for further discounts.
  • Keep on top of payment schedules and credit limits.
    Late payment and overlimit fees can add up. In addition, it could seriously impact your credit rating, which can sometimes increase your interest rates on major purchases. You could end up paying far more than you borrowed.
  • Emergency credit cards should be reserved for actual emergencies.
    Think about how much you really need something (versus just wanted something) before you charge it on your emergency credit card.