Here Are 7 Warning Signs of Problem Credit Card Usage

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  • There are several warning signs that you might be spending too much on your credit cards, and they aren't all obvious.
  • These include being close to your spending limit, not knowing how much you owe, and hiding your spending from others.
  • While not every warning sign applies to all borrowers, if you notice even one or two describe you, it may be time to reassess your credit card usage.

If any of these apply to you, it might be time to reassess your credit card spending.

Are you spending too much money on credit cards? Obviously, there isn't a one-size-fits-all number that is "too much." It all depends on your income, other financial obligations, and how your credit card usage affects your life.

With that in mind, here are seven common warning signs of problem credit card usage. While not all of these are likely to apply to any single credit card user, even one or two that fit your situation can be a good indication that it's time to reassess your credit card habits.  

1. You're getting rejected for balance transfers

One of the most effective ways to pay down credit card debt is to take advantage of a 0% APR balance transfer offer, either through one of your existing credit cards or by opening a new account offering a promotional rate.

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However, one of the criteria that a credit card company looks at when you apply for a new account is your existing debt relative to your income. And if the company offering the balance transfer deal thinks your debts are too high, it can reject your application -- even if your credit score is good.

2. You are at (or near) your spending limit

Experts say you should aim to keep your credit card balances below 30% of your limits to prevent adverse effects on your credit score, but this isn't a hard limit. In some cases, it can be financially practical to use more of your credit limit, like if you consolidate several credit card balances to a 0% APR balance transfer card. But if you find yourself regularly pushing up against your credit limits in the course of everyday spending, it can be a sign that your spending habits are unhealthy.

3. The minimum payments are getting tough to keep up with

Ideally, you'll be able to pay all of your credit card balances off before the end of your billing cycle, thereby never paying any interest. Of course, with the average American owing nearly $5,600 on their credit cards, this clearly doesn't happen all the time. If you carry a manageable credit card balance from time to time, it's not necessarily a big deal -- but if you find yourself struggling to keep up with even the minimum payments, it's a sign your credit card usage isn't sustainable.

4. You have no idea how much you owe

To be fair, I'm a Certified Financial Planner®, and I couldn't tell you the exact amount I owe on my credit cards right now, so don't worry if you can't either. However, you should be able to give a ballpark figure of your credit card debt, such as “about $2,000.” If you can't do that, it's a good sign you aren't budgeting when it comes to your credit card spending, and that is an easy way to let your spending get out of control.

5. You hide your credit card spending

According to a study by Bread Financial, 30% of men and 19% of women say they've hid credit card balances from their spouses. And to be fair, it can be tough to admit that you've let your spending get out of hand, or that you spent more than you had agreed on your credit cards. But this can be a slippery slope, as 76% of couples who have dealt with it say it harmed their relationships.

6. You have more credit cards than you can keep track of

The average American has four credit cards, and there can be situations where it makes sense to have a few more. But there are few situations where it makes good financial sense to have a double-digit number of open credit card accounts.

One sign that you have too many credit cards? You start having trouble keeping track of due dates, and forget you charged certain purchases on a specific card.

7. Your credit card debt affects your financial life in other ways

Last, but certainly not least, if your credit card debt (or payment obligations) is the reason you can't do other things you want to do financially, it can be a sign that you need to reassess your credit card usage. For example, if you want to buy a home, but your credit card payments are the factor that makes your debt-to-income (DTI) ratio too high, it's a sign you need to prioritize paying off your credit cards. 

The bottom line

To be perfectly clear, just because any one (or more) of these apply to you, it doesn't necessarily mean that you are abusing your credit cards. For example, there could be some good reasons to use the bulk of your credit card's limit. 

Having said that, if you think more than one or two of the items on this list describes your credit card usage, it could be a good idea to take a step back and assess whether your credit card habits are healthy or not. 

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