Signs a consumer is in over their head

Consumers will, at some point in their lives, pile up some amount of debt. Between mortgages, car loans, student loans and credit card debt, keeping track of payments can quickly spiral out of control without the proper know-how.

According to a report in the Atlanta Journal-Constitution, consumers can succumb to the dangers of credit card debt very easily unless they take a few precautions. For example, only paying the minimum on credit card bills means it will take years to pay off even the smallest charges thanks to interest rates, especially if the rates are above 20 percent.

The report also said some consumers who don’t know how much they owe and can spend each month versus what they earn. Credit card payments should not exceed more than 20 percent of monthly pay, and mortgages no more than 30 percent. One expert told the paper that he has seen many consumers whose interest payments exceed the principal, which is a major problem and can badly damage a consumer’s credit score.

A recent report from CBS News said that improving a credit score that may have been damaged is as simple as paying bills on time and checking their credit report for any inaccuracies.