Credit card debt is the balance owed on one or more credit cards. With a credit card debt, the cardholder is required to pay only a portion of the balance each month, while the rest rolls into the next month. That means it is a revolving debt. Every day that goes by with a balance left over on the card will cost the cardholder a certain amount in interest. That’s one reason why credit card debt is so easy to fall into, and why it’s hard to get out. The average American household has $9,070 in credit card debt.
Technically, any amount owed is considered a debt. But people usually won’t start calling it “debt” until it reaches an amount they can’t easily afford to pay off, or until the grace period is lost and the balance continues to be carried from month to month. The threshold for what’s considered “debt” obviously varies from person to person, and will depend on your income and other financial obligations.
If you find yourself consistently unable to pay off your balance month after month, you’re on the path to serious credit card debt. And when it gets to a point where you can’t afford the minimum monthly payment, it’s safe to say you are deeply in credit card debt.
Negative effects of credit card debt
Credit card debt can lead to damaged credit scores due to missed payments and high credit utilization. Damaged credit will decrease your odds of getting a good deal on a mortgage or a car loan, and will limit your access to credit in general. It can also lead to a host of other problems, such as anxiety, high stress, and depression.
That said, there are lots of resources for people in credit card debt, such as credit counseling and debt settlement. And there’s lots of advice for how to avoid credit card debt, such as requesting a credit limit decrease and sticking to a budget. If you think you might be in over your head with credit card debt, the best thing you can do is get your spending under control and make a detailed plan to get out of debt as soon as possible. The longer you owe a credit card debt, the bigger the balance gets.
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