8 Signs You Need Help With Credit Cards

Estimated read time: 10 minutes

”I'll just put it on my card.” Does this sound familiar? It starts innocently enough, but next thing you know it’s interest rates, maxed out cards, late fees — oh my!

Credit cards can be an excellent resource for transferring high-interest balances, paying unexpected bills or buying goods online. But when you're stuck in a cycle of credit card misuse, you may find yourself getting swept up in a whirlwind of bad debt.

The average American household owes more than $16,000 in credit card debt. Being over-encumbered in that kind of debt can negatively impact your credit score.

If you’re wondering whether or not to journey down the yellow brick road of credit solutions, you simply need to read the signs.

Seeking debt help is wise, responsible, and a courageous move.

Here are the 8 signs you need help with credit cards.

If you're on this list, you can start helping yourself and your wallet, today.

1. You don't know how much you owe

Without checking statements, how much debt do you have right now? If you can’t answer that simple question, there's a good chance you don’t have a plan for getting out of debt. According to the New York Federal Reserve, consumers owe 40% more than what they report.

It's time to face the reality of your balance head on, or you risk slipping further into debt. Here's how:

  • Your credit card billing statement will have the balance on it.
  • You can check online
  • You can download your bank's app on iOS App Store or Google Play
  • You can call your lender at the number on the back of your card

Knowing what you owe offers a number of benefits by helping you construct a payment plan and save money associated with fees. Don't give the banks and credit card companies more of your money. Instead, know what you owe.

2. You only pay the minimum

Paying the minimum amount each month makes it look like the debt is affordable, but it’s actually costing you your hard earned money.

When you realize you can only make minimum payments, the first step should be to freeze spending. Something as simple as taking your lunch to work can save you upwards of $125 per month. That’s cost savings that can go straight to credit bills.

It's easy to calculate, in three steps, a rough estimate of what it takes to pay off your card in one year.

  • Take the current balance.
  • Multiple by your credit card interest rate.
  • Divide that number by 12, and calculate the solution.

That's how much you'll need to put toward paying off your card each month if you wanted to get to zero in a year.

3. You're totally maxed out

Some take the hard-line stance that maxing out your credit card is never, ever a good idea. The reality is at times we need money we just don't have.

No matter how you got there, if you’re totally maxed out, you're in dire need of a repayment plan immediately. The situation becomes even more urgent if you withdrew cash off your card, which has a very high-interest rate.

The bottom line?

Not only are you left without any credit, but you also owe money. With a maxed-out card, you'll be paying a fortune in interest fees, assuming you can't pay off the balance. This risks your access to alternative credit, like another card in the future.

Should you find yourself maxed out on your credit card(s), here's what you can do:

Pay more than the minimum. Set up auto-pay, or bi-monthly deductions if you want to be aggressive crushing your debt.

If you only have one card that is maxed out, transfer your balance to a 0% APR financing card.

Do you have multiple lines maxed out? Start by paying the lowest first, moving your way to your largest debt. This is called the snowball method.

Only make future purchases on debit, or using pay services that link to your bank account.

Sure, unexpected events can require quick access to credit. But if you're maxed out on one or all, it's a glaring sign that you need help with credit cards.

4. You're often late with payments

Did you know that if you're late for 30 days or more, your account will be reported to credit bureaus?

With 35% of your credit score hanging on payment history, that's a surefire way to damage your score. In fact, depending on your creditworthiness, your credit score could drop anywhere from 60-110 points!

Some advice for paying your credit card balance on time includes:

  • Navigate to your card website and select options that enable you to auto-pay.
  • Create repeat calendar appointments reminding you of your upcoming credit card payments.
  • Use phone alarms as a reminder of your billing due dates.

Make a plan to pay early each month and avoid the stress of being late.

5. Your credit score is dropping

If you've determined your credit score is dropping, it is likely because of poor credit management, which weighs heavily on your overall credit score.

Late payments, missed payments, high balances and multiple applications to lines of credit, could all be reasons your score is dropping. A close study of the report will give your score and a history of credit usage.

By requesting an annual credit report, and checking your score regularly, you'll increase your chance of maintaining creditworthiness, because you know what is affecting your score and can take proactive steps to fix it.

If no errors are on the report exist, then it is time to face the likely scenario that you may be missing payments, are late with payments, or owe a large balance on your card. Take the advice already mentioned in this article to begin to repair your credit.

6. You have transferred or are considering a balance transfer

There's nothing wrong with transferring the balance on a card to another with a low or zero interest rate. In fact, this can be an effective way to pay off debt more affordably, provided you have an aggressive repayment plan in place.

But maxing out one card while applying for another to move debt around and access more credit, is a recipe for crippling debt and credit disaster. Regardless of why you're transferring the balance, first acknowledge that doing so is a sign you probably need help with credit cards.

Once a balance transfer has occurred, stop making new charges on the card. Instead, pay off the existing balance as quickly as you can—-and certainly before the low introductory interest rate period is over.

By paying off old debt quickly and not using the new card, credit agencies will forego carefully monitor your creditworthiness (no problems here, friends!) Plus, you'll smartly avoid a lot of money spent on fees.

7. Spending more than you can afford to qualify for credit card rewards

Many consumers are big fans of cards associated with rewards. From cashback deals to airline miles, travel points, hotel savings and more, there is a reward for everyone.

But to earn those rewards, there’s often a balance that must be accumulated quickly. Some people may end up with a high balance and then pay fistfuls of dollars in interest and annual fees.

Remember, a credit card company is a business. And what do businesses want? Your money.

Pump the breaks before you apply. Here are some great tips to consider first:

  • Check the fine print before and after you enroll in a program. Benefits, rules, and restrictions change. You will likely need to buy something before an offer kicks in. What?
  • Know how your spending rewards you. Certain offers are valid for specific types of purchases, like cash back at restaurants, or double points for hotel bookings. Don't think you can put your rent on a card, and instantly qualify for the bonus offer.
  • Should you go for a rewards card, have a plan on how to use it. Make sure you have the cash to pay for the balances you will put on the card.

A rewards credit card can be a great resource with exciting incentives. But if you find your wallet full of credit cards simply to achieve a reward, you may be paying more than you should just to get a debt participation trophy.

8. You know you have a balance but look the other way

Voicemails from lenders and a small stack of unopened bills can signal a dissonance between credit balances and payments. But don't panic. Nothing is as bad as you think.

The easiest thing is to set aside some time to go through your mail and listen to those pesky voicemails. You may find that it's simply that you have accumulated some late fees or that you've failed to pay the minimum balance on an old card.

While neither of those scenarios is great, it's not as bad as having your debt handed over to a collection agency. And once you know the problem, you can take steps to solve it.

What’s more is your lender wants to help you solve it. They don't want to escalate the problem by handing over your account to a debt collector because it will cost them money too. If you owe a balance, explain to your lender:

  • how much you can pay today
  • when you can issue another payment and how much that will be
  • you can call back with a longer-term plan, if needed, to get your balance paid.

They'll love to hear you've acknowledged the bill and that you're working hard to pay it.

Should your account be significantly late, and you learn that it's been handed over to a debt collection agency, don't think the world is over. There are several organizations with free advice to help you come up with a game plan.

Here are some organizations that can instantly offer you support and advice:

  • Freedom Debt Relief
  • National Debt Relief
  • DMB Financial

Hiding in the dark is no way to find your way to financial freedom. Don't be afraid to answer the phone, as your creditors are more interested in working with you to find a solution than you probably think.

The signs can lead you home.

Much like Dorothy’s trip to Oz, credit cards can be both an exciting and scary journey, but they aren’t all doom and gloom. There is a way back from credit card debt. The trick is to implement the right solutions for you.

In a perfect world, you are paying off your balance each month, accumulating fantastic rewards and with a high credit score to boot (or in this case, maybe a better analogy would be “to ruby slipper”).

Unfortunately, the world is not perfect. Bad credit debt’s a witch! Don’t ignore the signs that you’re slipping into the less-than-magical world of bad debt, or you may end up in trouble. The story’s yours, write it right the first time!

What sign did we miss?

Which one of these signs saved you or a loved one from painful credit card debt?

Let us know in the comments below.