Are there warning signs that credit cards are getting out of control?

People often worry about whether their credit card spending is getting out of control.  More often people will wonder whether the credit card spending of another person is going out of control.  There are a number of warning signs that can show a person that the credit card spending should be watched carefully.

One thing that can serve as a warning with credit cards is if there are problems making minimum payments on a credit card.  These payments are meant to be the bare minimum and people should be able to afford these payments comfortably, in fact a good rule of thumb is that a person should be able to triple their minimum repayments with not too much discomfort.  If a person is having trouble making their minimum payments in one month then this is a warning sign of trouble.  If a person is constantly having trouble making minimum payments on a credit card then this will mean that the person is in deep financial trouble.

It is a bad idea to only make minimum payments on all credit cards.  Although with most credit cards paying off the minimum will eventually pay off the card (assuming that nothing is added to the balance) this will usually be after thirty or forty years and the interest that has been paid off will be four or five times the original balance.

Another warning sign with credit card debt is if the balance is constantly going up month after month.  With a normal credit card account there would be periods when the credit card balance goes up but there would be other periods when the credit card balance trends downwards.  In fact most people should expect the periods when the balance goes downwards to outnumber the periods when it goes up by just over two to one.  If the balance is constantly going up then this could prove problematic as it is a sign that the day to day spending is going on the credit card and is in effect being borrowed.

Another warning sign is never using cash but always using a credit card when possible.  A variant of this is using cash advances to borrow cash on the card.  This is another sign that daily spending is going on a credit card.

Essentially a person should be watching out for daily spending going on a credit card and that there is a healthy repayment history that is above the minimum payments.