Americans collectively owed $1.14 trillion in credit card debt as of the second quarter of 2024, according to the Federal Reserve. This is up 5.8% year-over-year and reflects a $27 billion increase from the previous quarter.  

While many Americans made progress in paying down their debt during the pandemic, surging inflation helped reverse this positive trend in recent years, leaving millions relying on their cards to cover the basics and resulting in a sharp increase in defaults, with delinquency rates in 2023 coming in two percentage points higher than in 2019.

This problem is unfortunately compounded by high-interest costs. Credit expert John Ulzheimer, formerly of FICO and Equifax, explains that rates have soared from around 16% to 17% during the pandemic to around 24% today as the Federal Funds Rate has increased. With rising rates come higher monthly payments and increased difficulty paying down balances.

While there are options out there for debt relief, including debt consolidation or working with a debt relief company, the best choice for consumers is not to get in over their heads in the first place. But, how can you know if your charges are out of control? Below, we’ll detail how to tell if you’re in danger of getting into too much credit card debt. 

Suffering from out-of-control credit card debt? Start exploring the top debt relief options available here now.

How much credit card debt is too much?

While each user’s financial situation is different, there are some ways to determine if your debt is too high. Specifically, consider your answers to the following questions:

Is your credit impacting your financial health?

There’s one obvious red flag that immediately suggests you have a problem. 

“Credit card debt becomes too much when it negatively impacts your financial health,” warns Douglas A Boneparth, a Certified Financial Planner, financial advisor and president of Bone Fide Wealth, LLC. “When credit card payments begin to hinder other financial goals—such as saving for emergencies, retirement, or major purchases—this can be a sign that debt may be excessive.”

Boneparth explained that carrying large balances can both damage your credit score and cause you to experience financial stress. If you’re worried about your debt, or find that you’re devoting so much of your money to paying it that you can’t accomplish other things, it’s time to cut back — despite the benefits cards can offer. “It’s essential to strike a balance between the flexibility credit provides and the need to maintain long-term financial stability,” Boneparth said. 

So, how much is too much? 

“It’s a good rule of thumb that your monthly minimum payments aren’t more than 10 percent of your monthly net income,” advised Domenick D’Andrea, AIF, CRC, CPFA, financial advisor, and Co-Founder of DanDarah Wealth Management. 

Bonepath also advised keeping total household debts below 36% of income, with no more than around 10% to 15% of this allocated to credit card debt. Any more than this amount and you’d likely find it challenging to meet today’s needs and save for tomorrow. 

If your credit card debt currently exceeds these amounts then you may benefit from the help a debt relief provider can offer.

Get started here now.

Are you paying only the minimum?

Credit cards typically have low monthly minimum payments, but that doesn’t mean that they’re affordable just because you can cover that amount. 

“If you can only make your minimum payments that is a sign that you could have too much credit card debt,” D’Andrea warns. “If you’re only paying the minimum, it will take decades to get out of debt.”

In fact, if you owe $5,000 on a card with a 22% interest rate and a minimum payment that covers interest plus 1% of the balance, you’d be repaying your debt for 281 months and would incur $8,526.51 in interest costs over that time. 

That’s why Ulzheimer recommends paying your balance in full each month, especially with today’s high rates. 

While this isn’t always realistic for everyone, not being able to pay above the minimum is a major red flag that suggests your cards will cause you long-term financial problems. Most people can’t afford to lose thousands to creditors year-over-year without jeopardizing their ability to grow their net worth. 

Are you hurting your credit score?

Finally, it’s worth considering the impact your credit card debt has on your credit record.

Credit cards can help your credit score, or hurt it, depending on how you’re using them. If you charge too much, they’ll have a negative impact. This can make other, larger debts like a mortgage cost more. If you find yourself facing this situation, this is another major red flag. 

“It’s recommended that you keep your credit utilization below 30%,” Boneparth explained. Credit utilization is calculated by dividing the total amount of credit you have used by the total line of credit available to you. 

If your credit limit was $5,000 and you were using more than $1,500 of your credit limit, you’d exceed this ratio and your score would start to suffer. Paying off debt should become a priority in this situation and you certainly shouldn’t keep charging. 

What if you have too much credit card debt?

If you spot any of the above signs, there’s a good chance you have too much credit card debt. 

D’Andrea suggests taking a close look at spending habits in these situations. “If you realize that you’re overspending on wants, that’s a great way to start cutting back on your monthly spending,” he suggested. “If most of your spending is on needs, that’s where you need to look at your overall budget.” He advised getting help from a financial advisor in this situation, as more substantive changes may be needed to stop over-relying on your cards. 

The good news is, there are options for those with large balances they’re struggling with. For example, debt consolidation can save you thousands and significantly improve your finances, often without damaging your credit score if you take a new loan at a lower rate to repay costly credit card debt.  

However, some methods of tackling credit problems aren’t necessarily a good idea. The reality is that there are some debt relief companies that make false promises and put you at risk of damage to your credit. While some people may feel they need to explore all their debt relief solutions, there are red flags to watch out for, and dos and don’ts to be aware of, before deciding if any type of debt relief is worthwhile. 

For many people, the best choice is simply to buckle down, make a payoff plan, and make sure not to over-rely on cards going forward by knowing the signs that you’re getting in too deep. 

Have more questions? Learn more about the best debt relief options online today.

Washington — A long-brewing legal standoff over the popular video-sharing app TikTok gets underway on Monday, with arguments in the challenge against a possible ban kicking off. 

TikTok and its parent company ByteDance have been under fire by U.S. officials for years over warnings that China’s government could gain access to users’ data and use it to manipulate or spy on Americans. But a renewed push against the app gained momentum in Congress earlier this year, as lawmakers approved a foreign aid package that included provisions requiring it to be sold or be banned from U.S. app stores. President Biden signed the legislation into law in April, teeing up a countdown for TikTok’s sale.

TikTok and ByteDance filed a lawsuit against the Justice Department in May over the law, arguing that it violates First Amendment rights of users, among other claims. With the petition, the parties asked the court to block enforcement of the legislation, which they said would force a shutdown of the app by early next year, arguing that the sale of the app is untenable before then. 

Given the timeline, the U.S. Court of Appeals for the District of Columbia Circuit fast-tracked oral arguments. The parties are appearing in federal court in Washington, D.C., on Monday, where TikTok will ask for a preliminary injunction against the law.

The video-sharing app will argue that Congress passed the law “hastily” under a “closed-door” legislative process, multiple sources told CBS News, while making the case that it’s the government’s burden, not TikTok’s, to prove that the speech restrictions further a compelling interest — and are tailored to achieve the interest. It will also argue that there’s “no information” that China has manipulated information Americans receive on TikTok. 

TikTok has argued that the potential ban would be a “radical departure” from the U.S. supporting an open internet, while setting a “dangerous precedent.” Meanwhile, U.S. lawmakers and security experts stress that the Chinese government could tap TikTok’s trove of personal data from millions of U.S. users.

In a July filing, the Justice Department outlined that the concern “is grounded in the actions ByteDance and TikTok have already taken overseas, and in the PRC’s malign activities in the United States that, while not reliant on ByteDance and TikTok to date, demonstrate its capability and intent to engage in malign foreign influence and theft of sensitive data.”

On Monday, TikTok and the Justice Department will each get 25 minutes to present their case. 

Homebuyers have faced a myriad of challenges that have persisted over the past few years, including elevated mortgage interest rates, scarce home inventory and high home prices. The combination of negative forces has priced many buyers out of the market and left their hopes of homeownership in doubt.

Thankfully, the housing market is starting to turn the corner, with good news sprinkling into the sector. Inflation is cooling, and the Federal Reserve is expected to begin cutting rates this week. These developments could result in more favorable home loan rates. 

If you’re in the market for a new mortgage loan, take the time to research the best mortgage lenders. Below, we’ve detailed our best picks for the top lenders that could benefit you, depending on your situation.

Start by seeing how low of a mortgage interest rate you could secure here today.

Best mortgage lenders 2024

Here are six of the best mortgage lenders on the market now, broken down into six different categories:

Best overall: Veterans United Home Loans

Low rates are great, but finding the best balance of competitive rates, favorable terms, quick preapproval and exceptional customer service wins the day. Veterans United Home Loans checks all the boxes and is our choice for the best overall mortgage lender. As its name suggests, Veterans United specializes in Veterans Affairs (VA) loans but also offers conventional loans—with down payments as low as 3%—and other government-backed mortgages including FHA and USDA mortgages. Veterans United boasts a 4.8 rating (out of 5) on its website with nearly 400,000 customer reviews. 

Learn more about Veterans United Home Loans here.

Best for first-time homebuyers: PenFed Credit Union

PenFed Credit Union is an excellent option for first-time buyers as it offers rates on conventional loans as low as 5.5% and low or no down payment options, depending on your loan type. The credit union also offers a First Time Home Buyer Advantage mortgage with a 3% down payment option and no income limits.

Qualified borrowers may secure a conventional mortgage loan with a 3% down payment, an FHA loan with 3.5% down or a VA loan with no down payment at all.  PenFed also offers jumbo loans, home equity lines of credit and refinances. 

If you’re interested in a PenFed mortgage, you must become a member to qualify. Fortunately, the credit union is open to anyone who wishes to join.

Best for good credit: U.S. Bank

U.S. Bank is a large bank available to borrowers nationwide. You may prefer this bank if you like the idea of applying for a loan in person at a local branch. The bank also offers an online application process with a shorter approval time. U.S. Bank offers competitive rates for borrowers with a minimum credit score of 620, but higher scores may lead to a lower rate. 

In 2023, U.S. Bank launched the Access Home Loan program to improve homeownership opportunities for communities of color. This Special Purpose Credit Program (SPCP) provides eligible buyers with up to $12,500 in down payment assistance and $5,000 lender credit.

Best for bad credit: New American Funding

New American Funding offers three government-backed mortgage programs: FHA, VA and USDA. These programs provide affordable mortgage options for homebuyers who might have trouble qualifying for a conventional loan.

With a 10% down payment, you may be eligible for an FHA loan with a 500 minimum credit score. With a smaller down payment of only 3.5%, you may qualify with a 580 or greater score.

If you’re looking for more than government-backed loans, New American Funding provides a wide range of options, with over 16 different mortgage products to choose from.

Get started with New American Funding online today.

Best for fast funding: Better

Better’s One-Day Mortgage option may be worth considering if you need a fast closing or quick rate lock. This program gives qualified borrowers a rate and loan commitment letter within 24 hours, instead of the days or weeks many traditional banks require. Better also claims to close mortgages up to 17 days faster than the industry average. And if you find a lower rate with another lender, Better will match it. However, this option is not available for FHA and VA loans. Better enjoys a 4.4 rating on Trustpilot with over 1,700 reviews, 76% of which gave the lender a 5-star rating.

Best for low fees or closing costs: Alliant Credit Union

Alliant is a popular credit union that provides low and no-down payment options to help borrowers achieve the dream of homeownership. Alliant offers a large portfolio of mortgage options, including purchase, refinance and construction loans. As a credit union, rates are often lower than its traditional bank counterparts. Alliant’s website is also a cut-above the competition, making it easy to explore your options, estimate your payment or get preapproved in minutes.

The bottom line

Mortgage rates and terms vary from one lender to another, so it pays to get multiple quotes to find the best offer. Most lenders allow you to prequalify in minutes without affecting your credit score, so you can see the loan amount and mortgage rates you might qualify for.