Sign up for your free account    Sign Up Now
From the Experts at

How Much Debt is Too Much?

Advertiser Disclosure

How Much Debt is Too Much?

Advertiser Disclosure


Borrowing money can be a useful financial and credit-building tool. Loans can allow us to attain financial goals, including going to college and buying a home or a car. Certain financing can also be very convenient and cost-effective. For instance, you can earn rewards, take advantage of certain price protections and minimize the odds of being on the hook for fraudulent charges when using a credit card. But how much debt is too much debt? The answer can vary, depending on your overall financial health and what type of loan you’re talking about. However, here’s a general rule of thumb: Any debt you can’t pay off as agreed — meaning you’re missing payments or going over your credit limit — is a debt best avoided.

After all, high loan balances and missed payments can severely damage your wallet  — and your credit score. You can calculate the lifetime cost of your current debts and you can see how your debt levels are affecting your credit scores by viewing your free credit report snapshot, along with two free credit scores, updated every 14 days, on You’ll be able to set up a personalized action plan to help pay down your debt and increase your credit score. Here are some more guidelines regarding how much debt is too much.

How Much Is A Lot of Credit Card Debt?

If you are having trouble making the minimum payments on your credit cards each month, there is a good chance you’ve borrowed well beyond your capacity to pay off your debt in a timely manner.

You can create your own repayment plan using’s Credit Card Payoff Calculator. Alternately, if you can’t seem to break the cycle, reaching out to a nonprofit credit counselor for a free counseling session could help. A credit counselor will review your budget and look for ways to free up more of your money to apply to high-interest credit card debt. A debt management plan from a credit counselor is another option to consider when you feel as if you are drowning in too much credit card debt. (Note: There may be fees for credit counseling services.)

How Much Student Loan Debt Is Too Much?

Many college graduates have the same, familiar woe: too much student loan debt. According to the Project on Student Debt, 7 in 10 seniors graduating from public and nonprofit colleges in 2014 had student loan debt, with an average of $28,950 a piece.

With good-paying jobs hard to find, staying current with student loan payments can be a struggle. Using income-driven repayment plans for federal student loans such as Pay as You Earn is one way to keep student loan payments a bit more manageable. You can also ask your student loan servicer about other repayment or forgiveness programs you may qualify for.

How Much Mortgage Debt Is Too Much?

If you’ve borrowed too much for a home loan and are struggling to pay your mortgage, it’s a good idea to reach out to your lender for assistance before you fall behind on your payments. Debt help is available but you’ll need to ask for it. You can learn more about how to save your home from foreclosure here.

How Much Auto Loan Debt Is Too Much?

If you owe more on an auto loan than a car is worth, you’ve borrowed too much for your car. And you’ll want to squeeze out those car payments any way you can for a couple of years, since selling your car would likely mean rolling your old debt into a new auto loan. To avoid getting caught “upside down” and owing more on a car loan than a car is worth, make a down payment of 20% (or more) and limit your auto loan terms to four years or less.

Remember, with any kind of debt, falling behind on your payments can hurt your credit. It’s important to check your credit reports and monitor your credit scores for free to see how your debt and your payment history affects your credit.

    Call now for a FREE consultation
    CALL 844-331-2054

    Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

    Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

    • Joe

      Too bad we’re all not as well off or as savvy as you Clayton!

    • maveric43

      Healthcare costs, which includes insurance premiums are a very significant part of the “cost structure” of an average family.

      About 1/2 of the US working population have a yearly income/salary which falls at or below $50-$60 thousand per year.

      Because many citizens receive Healthcare coverage thru their employer they are not aware of the costs that are in effect “suctioned” out of their compensation package to cover the cost of premiums. The Health Insurance industry has done a great job convincing the public that the “best” and “highest quality” coverage is low or no deductible high premium coverage. This type of high premium coverage are among the most profitable products sold.

      True insurance ought to provide protection to the beneficiary from infrequent events that have high costs. People who want protection from relatively frequent high probability relatively low cost events must be prepared to pay considerably more in yearly premium coverage. Whether they or their employer pay the premiums, the cost difference between the two different types of policies can be as much as $6,000-$10,000 per year.

      For an average family of 4 with two parents between the ages of 40 and 50 with a combined income of $60,000 per year working with their employer on a “shared ” deductible product ( where the employer and employee share the cost of the deductible ) could feasibly translate into an additional family income of $10,000 per year.

      Imagine the economic benefit to society in returning $10,000 per year to about 50 million families ? That income would feasibly be recycled into purchases outside the insurance sector such as automobiles, clothing, electronics, housing, recreation……yes even reduction of debt !

      It can occur….but the public must understand the impact and aggressively seek health insurance products with high deductibles and low premiums. By example, policies for those citizens under the age of 40 shouldn’t cost more than $100/month with a $6,000 yearly deductible. Between 40 and 50……$150/month and those over 50 $300/month. If your employer is sharing the cost the premium costs could be cut in half !

    • Eldon Lile

      Credit is bad for most people – if by credit card are bank loan – when you deal with sales people – house they try to convince you, you can afford more then you can – its your decision not theirs – cars are the same way – you know how much you can afford and do not exceed that amount – to buy a bigger higher priced car by a 6years loan is foolish – to but a house thats 50% of your gross income is silly – use good old common since for all your purchases.

    • Marshell Taylor

      It used to be, and still should be the guideline, no more than 25% of your GROSS income. People don’t consider the extra MAINTENANCE expenses associated with owning a home. You should easily consider stashing away an extra $100.00 per month, just for current emergencies or future maintenance expenses. A new roof can easily cost you $7000 to $9000 and a furnace/air conditioning system is another $7,000 to $10,000 and the list goes on.

    • Monique LewisMoreno

      Soooooo, you read and followed Dave Ramsey’s plan? Soooooo that means you were in the DUHHH!!!! Club before that? And instead of being humble about it, you sound more like a hypocritical ass toward others who may be in your past situation. Wow.

    • Ronald Tucker

      I have heard the term “upside down” for decades in reference to the auto industry. What is a good analogy for a home owner who owes more on a mortgage than the house is worth. “under water”?

      • Credit Experts


    Sign up for your free account. Learn More receives compensation for the financial products and services advertised on this site if our users apply for and sign up for any of them.