How Much Credit Card Debt is Too Much?

How Much Credit Card Debt is Too Much?

Are you relying more on your credit cards than you should be? How do you know if you are relying on too much credit? The answers vary from person to person and their financial situation. However, there are a few general tips that everyone should follow to keep their credit under control:

Keep a low credit utilization rate.

Keeping a low credit utilization rate is one way to make sure that outstanding amount doesn’t start piling up. This is an important factor that also determines your credit score. Your credit utilization refers to the amount of credit you are using in relation to how much credit is offered to you. If you are exceeding your credit limit the chances are that you are accumulating debt, especially with the amount of interest that is added. Depending on how you pay back the credit you use, it’s advisable to not use all of your available credit if you can help it.

However, if you limit what you spend on your credit cards, that will go in your favor as far as your credit score is concerned, as that shows you do not need all the credit available to you. Try to make the payment during the due date, so that your credit score is not affected. This will also help to ensure you have a good credit score so that when you need a loan your credit score won’t be a red flag to lenders.

Make sure you can pay your card off every month.

A credit card is not offering you free money. In the end, all the expenses you incurred with your card have to be repaid. It is advisable to avoid making unnecessary payments with your credit card if you cannot afford to pay for what you have spent within a given period of time. Ideally, it is very helpful to pay off your credit card bill in full every month. If you don’t pay your credit card off in full, interest will be applied on the outstanding amount. The more you have outstanding, the more interest is applied. If you keep a rolling balance, where you’re only paying the minimum payment then you’re being charged interest on the monthly increasing balance. In this case, you will end up paying much more than the principal amount that is charged on your card. Over a few years you could have paid tens of thousands or lakhs in interest alone.

Keeping an Emergency Fund is Good Strategy

A loss of employment or the occurrence of an unexpected expense can leave many in sticky situations. Using credit cards to cover those expenses is handy and a short-term fix, as long as you remember that it is an expense you will need to cover from your own pocket at some point.

Using credit cards in emergency is a genuine way to use credit, but you can’t always depend on credit cards. It is a good strategy to have an emergency fund for those unexpected expenses. Putting a little away every month is a good habit to have and you’ll feel that you’ll have that bit of security if you ever need it. If you don’t end up using it, you could have enough to on a holiday.

What to do if you have too much credit card debt:

If you are constantly maxing out your credit card, and only making minimum payments, you won’t be able to pay off your outstanding amount and interest will be accruing every month. In order to avoid building up debt in interest, you need to keep your spending habit under control and make more than the minimum payment. To help you create a debt management strategy, use the following to guide you:

Strategically pay down your debt on your own.

There are two commonly used strategies to pay down multiple credit card debts without any help. These methods are known as – Debt snowball and Debt Avalanche methods.

If you have multiple credit cards, Debt Snowball is a method of debt repayment in which you start making higher repayments to the credit card with the lowest balance first. On the rest of your accounts, you make the minimum payment. Once the account with the lowest balance is paid off, move to the next lowest, and so on.

The Debt Avalanche method is the exact opposite of Debt Snowball. Here, rather than starting with the account with the lowest balance, start with the account that has a higher interest rate. In the long-run, this money will help you in saving more since the interest rates are comparatively high.

Seek help from a Debt counseling agency in India.

If you have difficulties or feel overwhelmed when attempting to pay off your debt, you may want to start looking for help. The best place to seek help is a debt counselling agency. A viable debt-free solution can help you live more financially independent, taking away all your stress. A counsellor can help you come up with a manageable budget and give you options to pay down your outstanding debts. One of these is a Debt Management Plan.


Having too much credit card debt can be overwhelming, but there are steps you can take to avoid accumulating debt. By keeping your credit utilization rate low, paying off your credit cards on time and in full, and having an emergency fund, can help you stay on track. Even if you already have a lot of debt, remember that there is help available, and you don’t have to go through it alone.

Single Debt is a debt counselling company that offers a range of debt solutions for most circumstances. Their advice is free, so even if you don’t take on their services you can at least get some information on what solutions are available. Don’t let debt spiral out of control, get a grip of it before it consumes your finances.

If you want more information on debt solutions, you can visit


The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. City Credit Management LLP is not liable for any decision arising out of the use of this information.

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