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What are the consequences of having too much credit card debt?

On Behalf of | Feb 27, 2023 | Personal Bankruptcy

If you are having trouble paying for the items you need to live, you certainly are not alone. In fact, according to reporting from CNBC, nearly one-third of American adults are struggling to pay their monthly bills. This leaves many with few options but to use credit cards.

Credit cards can be good, as they allow you to obtain goods now and pay for them later. If you accumulate too much credit card debt, though, your financial well-being is likely to suffer. Indeed, there are some very real consequences that come with having excessive consumer debt.

Problems making minimum payments

Most credit card issuers are quick to report missed and late payments to the credit bureaus. Consequently, if you cannot make at least your minimum monthly payments, your credit score is likely to plummet. Even worse, defaulting on your credit card bills can cause the issuer to refer your debt to a collections agency.

Problems obtaining financing

Eventually, you probably want to purchase a new car, buy a house or even apply for additional credit cards. Too much debt can wreak havoc on your plans, though. Specifically, if you are using more than about 30% of your available credit, lenders may decide you are too much of a financial risk. They even might choose to decrease your credit line.

Climbing out from under a mountain of credit card debt can be a Herculean feat. Ultimately, if paying off your outstanding balances is simply not possible, it might be time to look into bankruptcy and any other debt-relief options you have.