Out of sheer curiosity - how much credit card debt is too much credit card debt? I have none (pay off regularly) just wondering what other people consider “a lot of credit card debt”.

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Depends on your credit limit and your ability to pay it off. If you’re not paying off your balance every month, staying under 30% of your limit is ideal. Once you use more than that, your credit score drops like a rock, and you are labeled a “high risk “ borrower.

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Ok reading this and now I have a question. I’m carrying a balance and I have money in the bank but I get nervous paying it all down instead of keeping reserves for some emergency. I have 35k in credit card and 55k in the bank. Interest rate is about 13%. This credit card was zero APR but that ended a few months ago. Should I just pay it all? To clarify I have more assets but it’s either real estate or an investment account that I don’t want to have to touch.

A2, a zero APR card is a whole different story. If you have some gigantic one time expenses coming that you could pay in cash, or finance over a year at 0%, then hell yeah take the free financing. For instance if you’re getting married or buying an engagement ring. But, that’s assuming you aren’t going to be paying any interest, aren’t going to be putting yourself in a bad financial position by buying things you can’t afford (leading back to paying interest), and won’t negatively impact your credit score.

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If you can afford to pay it off every month, $1 in credit card debt is too much. There’s no reason to pay interest if you don’t have to.

If life happened and you had to float yourself on credit for a while, anything over 29% of your available credit is “too much” in the “hurts your credit score” sense.

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Not sure I phrased this question right, so let me try again.

Assuming a person did not have the money to pay off their credit card each month, at what point do people generally consider their debt to be “too high”? Is that number $1000, $5000, $50,000..?

For example, a shopaholic who has a tough time paying off their credit card, says they have too much credit card debt. Around much could you assume they have? What number would you consider outrageous?

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IC, I also rang up some credit card debt late in law school and during a judicial clerkship. In 2021 dollars the total was probably $10,000 or a little more. I understand the issue. But I still say $1 is too much. It took me years to pay off those cards. To do it I cut up all but one of them and stopped charging on that one. I literally paid cash for everything until the balance was zero. Then I vowed never to carry a balance again and I haven’t. Carrying credit card debt is a disaster waiting to happen. So yeah, it happens, but it should happen only in rare occasions when there’s literally no other option.

Yep. So it doesn’t matter if your available credit is $10k or $100k, the 30% threshold is where you start getting into trouble for being in “too much debt.” So the answer to your question could be 3k or 30k (or 300k), depending on the borrower.

I’m not sure how much value there is in setting a dollar amount as “too much” anyway. $10k in debt, to someone at Skadden won’t kill them. But to a Skadden Fellow making $45k/yr or whatever? That $10k hits different.

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You should be carrying $0 balance. You should not use more than 1/3 of your cards balance and not more than 1/3 of your total credit limit.

If you have a balance, that’s ok. Fix it. Stop paying 20% interest. Cut your expenses until you get it to $0. Emergencies happen. But then fix it.

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This is all super subjective and totally depends on income, etc. If this is someone you know, just ask them. And then let us know bc I’m curious 😜

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I’ll give an actual answer (I.e my opinion). If you’re paying more than 15% of your monthly take home pay just to service the credit card debt, I.e. not meaningfully paying down principal, it’s way too much and you’re just recycling your own cash.

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I feel like we are all saying the same thing here. 😂

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Any credit card debt is too much. The interest rates are modern usury.

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