Wednesday, 23 August 2017
Many people who find themselves in unmanageable credit card debt say, "It just snuck up on me."
But chances are there were warning signs they either were unaware of or chose to ignore. Here are seven red flags that indicate credit card debt is mounting:
As Mark Twain said: Denial ain't just a river in Egypt. If you can't face your credit card statements each month, you probably already know you are in over your head.
Charging all of your daily expenses to a card can be a great personal finance tool that makes it easy to track and budget expenses — and reap travel, shopping, and cash rewards. But if you're paying for your phone, groceries, and basic needs on credit and carrying over a balance every month, you are likely living beyond your means.
If finances are so tight that you can't afford the minimum monthly payment, you could have a problem.
Emergencies happen, and a cash advance once per year or less is not the end of the world. But frequent credit card cash advances to pay for daycare or groceries are a financial red flag.
Have a card that is maxed out? More than one? Uh-oh. Maxing out cards will affect your credit score and should be a warning to reassess your spending habits.
If you don't actively manage your credit cards and credit history, you are floating down the denial river on a disbelief raft that will burst at any moment. Open those statements, write down the balances, APRs, annual and late-payment fees, and start paying attention.
If you are not actively managing your debt, and that debt grows each month, you may be avoiding some hard truths about your financial situation. Could you take a second job and use the debt snowball method? Or does it make more sense to consider debt consolidation loan? It's always a good idea to discuss your options with a trusted and well-qualified financial adviser to determine what's best for your situation.
The content provided is for informational purposes only. Neither BBVA Compass, nor any of its affiliates, is providing legal, tax, or investment advice. You should consult your legal, tax, or financial advisor about your personal situation. Opinions expressed are those of the author(s) and do not necessarily represent the opinions of BBVA Compass or any of its affiliates.
Links to third party sites are provided for your convenience and do not constitute an endorsement. BBVA Compass does not provide, is not responsible for, and does not guarantee the products, services or overall content available at third party sites. These sites may not have the same privacy, security or accessibility standards.
Are you deep in debt? Bankruptcy should be a last resort. Check out our advice for how to manage and overcome your debt without declaring bankruptcy.
Got questions about your credit report? Find out everything you need to know: where to get your credit report, how to read it, and what your score means.