Credit card debt
is a type of unsecured debt that accrues when a person uses a credit card to make purchases or obtain cash advances. Unlike secured debts, such as mortgages or car loans, credit card debt is not backed by collateral. This means that if a borrower defaults on their credit card payments, the lender has no legal claim to any specific assets.
The impact of credit card debt on an individual’s financial well-being can be significant. High levels of debt can lead to increased interest payments, reduced credit scores, and difficulty obtaining new credit or loans. Additionally, excessive credit card debt can cause stress and anxiety, affecting a person’s overall quality of life.
In order to determine how much credit card debt
is too much, it is important to consider several factors, including income, expenses, and financial goals. By understanding the relationship between these factors and credit card debt, individuals can make informed decisions about their credit card usage and manage their debt more effectively.