Money » Get Out Of Debt » 9 Warning Signs That Your Debt May Be Out of Control
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9 Warning Signs That Your Debt May Be Out of Control

Understanding when you’ve crossed that line into too much debt can be difficult. Here are 9 warning signs that your debt may be out of control.
Jack Wickens
Jack Wickens
Jack is a personal finance writer who has been writing for more than a decade. His passion for educating consumers and helping everyday families earn more and live better. He is most knowledgeable with years of experience covering topics such as savings, budgeting, and responsible credit use and always happy to share his expertise with readers.

You can trust the integrity of our unbiased, independent editorial staff. We may, however, receive compensation from the issuers of some products mentioned in this article. See how we make money.

Table Of Content

If you know how to use credit and debt properly it can help you get a home, a car and even pay for your children to go to college.

But for those who find themselves in too much debt, it can be a huge problem throughout their life.

The important thing is to be able to keep up with your debt payments, but that’s not the only thing. In fact, you need to be able to manage your finances overall, and that can take more effort.

On top of this, if you’re using money for your debt it means that you’re not using it for other things.

Carrying credit card debt can significantly compromise your financial health. Unfortunately, many consumers do have credit card debt. In this chart compiled with 2020 Nilsen data, we can see that over time consumer debt has increased from $3.8 trillion in 1991 to $16.10 trillion in 2019.

However, the percentage of credit card debt remains relatively stable. It has only increased from 6.9% to 7.3% in the same time period. Of course, the amount of credit cards has increased, but as the percentage has remained fairly stable, it suggests that consumers are relying on other types of finance to manage their debt.

US Credit Card Debt as a Percent of Household Debt

The Risk of Carrying Debt

If you have to spend on unnecessary forms of debt you’re going to be taking away from what you need for your future. If you’re trying to build wealth that becomes even more difficult with too much debt.

Understanding when you’ve crossed that line into too much debt, however, can be difficult.

Sure, you can get a mortgage for your home. But if you take out a loan that’s too large you could be in trouble.

The same thing happens sometimes with personal loans, credit card debt and car loans. It doesn’t matter if you can qualify. What matters is whether you can actually afford to make the payments.

A majority of Americans have a plan to reduce their personal debts within specific timelines, based on a poll conducted by Northwestern Mutual. 45% of Americans expect to pay off their debt in 1 to 5 years, compared to 9% who expect to pay debts for the rest of their lives. 34% of the respondents expect to pay off their debt in 6 to 20 years. Only 12% of the respondents said that they do not know how long they will be in debt.Chart: Time Consumers Expect to Remain in Debt in the U.S. 2021

If anything we’ve just talked about sounds like you then it may definitely be time to start making some changes in your life.

1. Your Debt Continues to Grow Each Month

If you’re already having trouble with your debt and you only continue to get more and more debt each month that’s not a good sign.

Even if you’re able to make the minimum payment or a little more increasing your balance is never a good sign. It’s great to make a $600 payment. But charging $800 that month means you’re having some problems in the long run.

It means that you’re going to need to do something about your spending or you’re going to be in even more trouble with your finances.

2. You’re Making Late Payments

Skipping your payments means that you’re definitely in trouble with debt.

Each time that you make a late payment it means even more problems on your credit score and it definitely makes it less likely that you’ll be approved in the future.

Not to mention you’re going to end up with additional fees each time that you pay late on your credit cards or loans.

3. You’re Making Minimum Payments

There are some really good reasons to use credit cards and some great ways that they’re going to make things easier for you.

The problem is that those benefits are only good if you pay off the card every single month.

Keeping a balance on your card is going to detract from those benefits. When you get to paying only the minimum you’re going to pay a whole lot more than you might think.

In fact, you’re going to pay fees, finance charges, interest and much more, and for a whole lot longer than you might think.

Paying no more than the minimum is a sign that your debt is really starting to get out of control.

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4. You Have to Borrow Money to Make Bill Payments

When you’re borrowing from people you know or you’re getting a cash advance in order to pay a bill it means there is a very serious problem.

If you’re using a cash advance you’re doing the worst possible thing that you could with your credit card. You’ll get an insane interest rate plus fees for the cash advance.

You’re also going to have a problem trying to get money over and over again. You’ll eventually have to do something about the debt itself.

Figuring out what you can do to cut down your expenses and increase your income is going to make it easier for you to make your payments and not have to borrow from others.

5. You Applied for Credit and Were Denied

A credit card company doesn’t really want to give you a card if they think you’re going to be a big risk.

They want to make sure they’re going to get their money back. That means they look at your debt in making a final decision on giving you credit.

If you’ve been denied credit or you’re being offered really bad terms on your credit you should take a closer look at your debt.

This means that you have excessive debt, because lenders want to be able to get money from you. It means you definitely have a problem.

6. You Transfer Your Balance Too Many Times

Transferring debt from one account to another seems like a great idea. You can open up a brand new credit card that offers low interest and then transfer the balance you have over to another card.

The problem is that the introductory period is going to end. The interest rate is going to go up, and then what?

Most people open a new card and start the process over at this point.

It may seem like a great idea, but it’s really not. You keep moving the debt around and around, hoping that at some point you’re going to get it sorted out. But you’re not actually paying off anything.

You could end up owing far too much money and you could end up with missed payments or declined credit card offers if you’re not being careful.

Transferring your balance can be treated as a good plan if you’re careful about not purchasing anything else with that card and only paying off the new balance.

7. Your Credit Score is Going Down

If you carry a balance for a long time it’s going to increase your credit utilization ratio.

That number, if it gets above 30%, will cause your score to start going down. If you’re at 10% or less, on the other hand, you’re going to see improvements for your score.

The problem is, if you keep a balance too long you’re probably also going to have interest and fees that will continue to increase your ratio and continue to decrease your score.

This chart created with Experian data shows that those with an average to good credit score have an average credit utilization ratio of the optimum 33%. This ratio drops significantly for those with very good and excellent scores.

At the other end of the scale, the chart shows that those with poor credit scores typically have a very high credit utilization ratio, with an average of 73%. This will be a massive factor in lending decisions for those in this group.

Average Credit Utilization Ratio by Score

8. You Have a High Debt-To-Income Ratio

When it comes to your debt-to-income ratio you’re looking at a percentage.

Lenders look at that percentage to figure out how much money you have going out compared to what you have coming in.

The best way to figure this out is to add up each. Then divide the amount of your money going out by your total income. This will give you a percentage.

Someone with an income of $10,000 and total debt of $6,000 will have a 60% debt-to-income ratio.

That’s going to be too high for most lenders who want you to stay at or below 40%. If you’re applying for a mortgage especially you want to keep your ratio as low as possible. If you’re at this level of 60% it means you’re definitely too far in debt.


It’s a good idea to pay attention to this ratio periodically, even if you’re not planning on making any major purchases. You want to make sure that you’re continually lowering this amount and not increasing it with new debt.

Your best bet is to start cutting your expenses or increasing your income.

You’ll be even better off if you can do both. If you do both of these you’re also going to increase and rebuild your credit and that may make it easier for you to use some of the special tools for improving your debt situation.

9. You Lie About Your Debt

If you tend to lie about how much money you owe it’s a sign that you know there’s a problem and you don’t want to admit it. You probably feel embarrassed about it and you’re worried about what people will think.

If you lose sleep or can’t concentrate because of your extreme debt you definitely need to do something about it.

Lying isn’t helping anything. It’s just making you feel worse. If you actually do something about that debt you’ll feel better faster.

Don’t Keep Ignoring!

Maybe you already know that you have a problem with debt, but you would rather deny it than do anything about it.

You’re probably worried all the time, but you still try to deny there’s a problem. Once you actually start doing something about your debt you might be surprised how much better you feel.

There are a couple of great ways developed by professionals exactly for such situations such as debt avalanche or debt snowball methods.

It’s going to take hard work, time and effort. It’s going to be difficult. But if you actually admit that you’re too far down that rabbit-hole of debt and you start making changes you’re going to improve things for yourself.

If you let things just keep going the way they are and don’t make changes you’re just going to make the problem worse.

You don’t need to face it all alone. You can find professionals like nonprofit credit counselors and financial advisors. They’ll help you understand where you are, what your options are and how to move forward.

That way, you can control your spending and create a payment plan.

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