Some people find themselves in credit card debt when too many surprise bills hit. Other times, credit card debt is something that slowly but steadily accumulates over time, to the point where it becomes less and less manageable.

As a rule of thumb, it’s best not to run into credit card debt at all. The more you accumulate, the more money you will lose in interest charges.

But that’s not the only problem with credit card debt. Here are some reasons why too high a balance could hurt you financially.

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1. This can leave you with a higher mortgage rate

The more credit card debt you have, the higher your credit utilization rate is likely to be. It is the ratio that measures your existing revolving debt against your total credit limit. Once this ratio exceeds the 30% threshold, it can lead to damage to the credit score. For example, if you have a total credit limit of $ 10,000 and you owe more than $ 3,000, you risk negative consequences. This, in turn, can make borrowing more expensive.

If you’re looking to buy a home, having too much credit card debt could leave you with a lower credit score – and end up with a higher mortgage rate. Plus, if you have too much debt that you monopolize too much of your income, a mortgage lender may turn you down completely.

2. It can make a personal loan more expensive

Just as you might end up with a lower interest rate on a mortgage when your debt load is huge, the same could happen with a personal loan. In fact, since personal loans are unsecured, meaning that they are not backed by a specific asset, lenders rely heavily on the credit scores of borrowers to determine rates. interest to be granted. But if a huge pile of debt lowers your score, it could mean paying a lot more to borrow.

3. It can cause you to lose lucrative credit card offers

There are many credit cards that offer attractive rewards programs and signup bonuses. These can put extra money in your pocket, but if your high level of credit card debt lowers your credit rating, you might not be eligible for these offers. If anything, you’re more likely to end up with a credit card that offers less rewards and charges a higher interest rate on new balances.

No longer have debts

If you’ve somehow climbed a huge pile of credit card debt, don’t despair. Instead, try to reduce that balance as quickly as possible.

Set a budget so that you can carefully track your spending, and cut as much spending as possible to free up money to pay off your debt. You might also consider finding a side job to raise extra money that can be used to pay off your debt.

At the same time, check to see if you qualify for a balance transfer, which will allow you to transfer your existing credit card balances to a new card with a lower interest rate. This, in turn, will make that debt easier and less expensive to eliminate. And the sooner you do it, the less your personal finances will be affected.


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