How Much Credit Card Debt Is Too Much? (2024)

While credit cards are useful for building good credit history and convenient for making everyday purchases, they can be a slippery slope to unwanted debt if not managed carefully. There isn’t a recommended maximum limit for credit card debt cardholders can live by—the key to maintaining a good credit score is keeping credit utilization below 30% and paying off balances on time.

How Much Credit Card Debt Is Too Much?

“Too much” debt depends on the cardholder and their financial situation. According to consumer credit reporting agency Experian, the average consumer debt on credit cards in 2022 was $5,589. For some, this might be too much debt but for others this might be their average monthly spend on a credit card.

On the surface, zero debt sounds a lot better than having any debt at all. Debt, after all, indicates an obligation and freedom often equates to a lack of obligations. Unfortunately, our system doesn’t work this way.

For credit purposes it can be beneficial to have at least a small, regular revolving balance so issuers and lenders can see responsible credit card activity. In other words: To prove your financial responsibility when it comes to your loans and debt obligations. Luckily, due to credit card grace periods, you can revolve a balance without ever paying interest. Without any credit history, or showing any balances carried with responsible payment behavior, it may signal to lenders that you’re too risky to lend money to.

How Do I Maintain Manageable Debt?

Credit utilization remains a key factor in credit score calculation. A credit utilization rate is the amount of credit being used compared to the total amount of credit a cardholder has available across all credit accounts. It’s generally recommended that cardholders keep credit utilization below 30%.

Calculating credit utilization is fairly straightforward: Add up the credit limits of all the credit cards you have to find a total credit limit. Then add up the balances on all your credit cards and compare the two numbers. If your total balance is more than 30% of the total credit limit, you may be in too much debt.

Some experts consider it best to keep credit utilization between 1% and 10%, while anything between 11% and 30% is typically considered good. Card issuers and lenders want to see a cardholder using revolving credit and paying off balances responsibly.

Cardholders who don’t use their card aren’t making the issuer any money unless they’re paying annual fees, but cardholders who use too much of a credit limit are seen as posing more risk. Having at least a little debt can actually increase your credit score over time as long as the credit activity is considered healthy—meaning payments are made on time, balances are kept low, etc.)

How To Pay Off Credit Card Debt

When credit card debt feels out of control and high interest rates loom, options exist to help lower credit utilization and manage the debt more responsibly.

Pay Off Credit Card Balances

If cardholders have sufficient funds, the quickest way to lower debt is to pay off all credit card balances as soon as possible. Obviously this requires liquidity and may not always be possible. Budgeting to pay off balances over time can help, even if interest begins to accrue.

There are other options if a cardholder needs more time to pay down debt:

Apply for a Personal Loan

Personal loans are a less-expensive option for cardholders who need more time to pay down debt. Personal loans can offer much lower interest rates than credit cards. According to Federal Reserve data, the average credit card interest rate in Aug. of 2022 was 18.43% while the average personal loan interest rate on a 24-month loan was 10.16%. You can use our loan calculator to estimate various interest rate and repayment scenarios.

Loan applicants without a great credit score can ask a friend or family member with excellent credit to act as a co-signer, which could further reduce the loan applicant’s interest rate. This enables the cardholder to consolidate more credit card debt to one personal loan to pay down over time.

Using a home equity line of credit (HELOC) may be another option to access borrowing power at lower interest rates.

Remember to practice responsible credit card spending after consolidating debt into a personal loan or any loan of any kind.

Apply for a Balance Transfer

Some credit cards offer introductory 0% promotional APRs on balance transfers for new customers. Cardholders with too much credit card debt can consolidate debt onto a new card.

Balance transfers have limitations. A new cardholder can only transfer up to the credit limit of the new card and balance transfers typically require a one-time fee for each transfer, which will increase the amount owed. If cardholders hope to consolidate multiple debts, each transfer will incur a fee.

Cardholders should keep in mind that interest will start to accrue at the end of the promotional period if the balance is not paid off. The minimum payment determined by the card issuer is often not enough to pay off the transferred balance.

Before applying for a promotional balance transfer offer, calculate how much it would take to pay off the balance before the promotional period ends. Divide the total balance by the number of months included in the promotion (e.g. 12 months). The answer is how much the cardholder should pay every month if hoping to pay off the balance completely during the 0% introductory APR period and avoid interest.

Bottom Line

There isn’t a magic number for too much credit card debt. Every cardholder should be aware of balances and spending habits to avoid falling into a cycle of debt. If a cardholder’s credit utilization rate is over 30% or he or she is accruing interest by not paying off balances, then debt may be too high. Anything unmanageable is too high and if you’re feeling like it’s becoming difficult to keep up with payments or make headway on paying down your debts, you’re probably finding your limit.

Consider making a budget to help with paying down your balances, or applying for a personal loan or a balance transfer card to help jump-start a debt payoff plan.