How Much Credit Card Debt Is Too Much?

A general rule of thumb is that your total debt payments, including credit cards, should be no more than 36% of your gross monthly income (income before taxes and deductions). However, the ideal percentage depends on your individual finances and goals; higher earners may be able to manage larger credit card payments.

The average credit card balance per consumer is $6,580, according to TransUnion, but what feels manageable varies per person, their income level, and the amount of other debt.

Here are some guidelines that can help you gauge your level of debt.

• Monthly payments: Are you able to pay off your full credit card balance each month? If you can’t easily do so, debt can accumulate quickly due to high, compounding interest, making it harder to repay or manage growing balances responsibly.
• Utilization ratio: Assess your credit utilization ratio, or the amount of revolving credit you’re using compared to your total available credit. It’s generally recommended to keep your utilization below 30%, but lower is better, according to FICO. A higher credit utilization ratio can also negatively impact your credit score.
• Income: The widely regarded “20/10 rule” suggests keeping your revolving and installment loan debts below 20% of your yearly take-home pay and below 10% of your monthly take-home pay (excluding rent or mortgage payments). Limiting your debts to these levels can help build financial stability.

Tip: If you have high credit card debt across several cards, combining your balances into one loan can help you pay down debt. BHG Financial offers personal loans for credit card debt consolidation that can help lower credit utilization and manage debt.

There are several warning signs that indicate you may have excessive credit card debt, such as:

• You can only make minimum payments: If you’re struggling to afford the minimum payments on the cards each month, this could be a sign that you’re carrying too much debt. In this scenario, your remaining balance will continue to accrue costly interest charges, increasing your debt and the time it will take to pay it off.
• Your credit score drops: Carrying too much credit card debt month-to-month can negatively impact your credit score, especially if you are nearing the spending limit. Reaching your credit limit will increase your credit utilization ratio and, in turn, lower your score.
• Your financial situation is suffering: Any strain put on your monthly budget can make it harder to meet other financial obligations. If card payments are preventing you from saving for emergencies, retirement, or other expenses, you might have too much debt.

If this feels familiar, you’re not alone. According to recent survey data from BHG Financial, 66% of respondents carry credit card debt, and 12% of high earners said credit card debt is currently their largest expense. What’s more, 13% of Americans earning at least $100,000 annually said relying on credit cards to maintain a lifestyle beyond their means contributed to their current debt.

These numbers underscore how quickly credit card balances can escalate—even for people with strong incomes and otherwise solid financial habits.

Having too much credit card debt can negatively impact your financial health in several ways.

• Credit score reductions: Too much credit card debt can negatively hurt your credit score because it often increases your utilization ratio and debt-to-income ratio. Missed payments also significantly impact your score.
• Continuous debt cycle: High interest charges make it hard to pay down the principal balance. If you can only afford the minimum payment, your balance will keep growing and trap you in a cycle of debt.
• Borrowing challenges: As your debt rises, you may find it more difficult to borrow money, especially if it has lowered your credit score or increased your debt-to-income ratio.
• Limited financial flexibility: When a large portion of your income goes toward credit card payments, you have less money for other things you need or want. This can make it hard to handle unexpected expenses or save for other important goals.

There are several steps you can take to pay off debt and reduce your credit card bills.

1. Estimate your total debt and financial situation

Start by getting a clear picture of what you owe. List each credit card balance, interest rate, and minimum monthly payment, along with any other recurring debt obligations. Then, calculate how much of your monthly income is going toward debt payments overall.

Next, review your utilization ratio. This metric plays a major role in your credit score and can help signal whether your balances are manageable or becoming a liability. Seeing everything in one place makes it easier to identify pressure points and decide which balances need attention first.

2. Evaluate the cause of your debt

Understanding how you got here is just as important as knowing how much you owe. The convenience of credit cards tends to encourage discretionary spending that can add up over time, especially when considering our growing culture of consumption.

BHG survey data shows that one in five respondents (20%) cited impulse purchases or overspending on non-essential items as a factor in their current debt. Nearly 19% said daily convenience purchases—like coffee, snacks, or gas—contributed most to their balances, followed by travel (18%) and dining out (14%).

Recognizing these patterns can help you put guardrails in place and avoid reaccumulating debt after you pay it down.

3. Find the right payoff plan for you

Once you understand the scope and source of your debt, the next step is choosing a payoff approach that fits your cash flow, goals, and tolerance for complexity.

1. Debt consolidation

Debt consolidation is a common way to reduce and manage credit card debt, especially if your balances are excessive. Consolidating your debt with a personal loan, for example, allows you to pay off higher credit card balances, leaving you with a single payment and a fixed interest rate. In some cases, these rates are lower than those on your credit cards.

More importantly, debt consolidation can improve your credit score. Most BHG credit card debt consolidation borrowers improve their FICO score by 30 points or more within a few months of funding.*

Personal loans for debt consolidation can generally range from $1,000 to $100,000; however, BHG Financial offers debt consolidation loans up to $250,000.¹

2. Balance transfer credit cards

You can move credit card balances from other cards to a new balance transfer card with a lower introductory rate. These cards can save you a significant amount of interest, as long as you pay down the balance within the allotted promotional timeline.

Just be sure your amount of debt falls within the new card's credit limit that you’re approved for, as this limit can be lower than what you could get with a personal loan. You might also have to pay a fee when transferring balances between cards.

3. Debt snowball or avalanche method

The debt snowball and avalanche methods are two popular strategies for eliminating credit card debt by consistently chipping away at your balances without adding another credit product to your portfolio. 

The snowball method involves paying off your smallest debt first for quick wins, while the avalanche method focuses on tackling the debts with the highest interest rates first to help you save money in the long run. However, you’ll need to commit to this payment schedule and stick to a budget to avoid taking on more debt in the process. 

Personal loans tend to have lower interest rates than credit cards, which you can leverage to reduce debt strategically.

Borrowers with good credit may be able to secure a lower interest rate than they're currently paying on their existing credit cards. The lower rate could free up extra room in your budget to increase your loan payments. This also helps you save significantly on interest over time.