What's the worst debt to have?

Asked by: Mrs. Anika Schumm Sr. | Last update: February 15, 2026

Score: 4.6/5 (32 votes)

The worst types of debt are generally high-interest, predatory loans like payday loans, title loans, and high-interest credit cards, as they trap borrowers in spirals of compounding interest, making them nearly impossible to escape. Other bad debt includes loans for depreciating assets (like expensive cars) or using home equity to fund daily expenses, as it puts your home at risk.

Is $30,000 in debt a lot?

Yes, $30,000 in debt can be a significant amount, especially high-interest credit card debt, making it a "wake-up call" that needs a plan, though it's manageable with strategies like budgeting, debt consolidation, or seeking professional help, as many people, especially college graduates and Millennials, carry similar or higher amounts. The key isn't just the total, but your income, interest rates, and ability to make payments, often assessed by your debt-to-income ratio (DTI).

Is $20,000 in debt a lot?

Yes, $20,000 in debt is significant and can feel overwhelming, especially if it's high-interest credit card debt, but it's manageable with a solid plan, as many people successfully pay it off by budgeting, consolidating, or using credit counseling to reduce interest and make payments more feasible. Whether it's "a lot" depends on your income, other debts, and spending habits, but it's a large enough sum that it requires focused effort, potentially taking years if only minimum payments are made, according to CBS News.

How many Americans have $20,000 in credit card debt?

While exact real-time figures vary by survey, recent data from early 2025 and 2026 suggests a significant portion of Americans carry substantial credit card debt, with estimates ranging from around 20% of all Americans owing over $20,000 (a 2021 survey) to specific surveys finding that over 23% of those with maxed-out cards and a notable percentage of middle-income earners fall into this category, with trends showing increasing balances due to inflation.

How much debt is healthy?

A good rule of thumb is to keep your credit utilization below 30% and your debt-to-income (DTI) ratio under 36%. Once your DTI climbs above 43%, lenders may view you as a higher risk.

I Can't Even Make The Minimum Payments! ($555,000 In Debt)

30 related questions found

How rare is an 800 credit score?

An 800 credit score isn't extremely rare, with about 22-24% of Americans having scores in the exceptional 800-850 range, meaning nearly one in four consumers achieves this level, although reaching a perfect 850 is much rarer. While impressive, an 800+ score signifies you're a highly reliable borrower, granting access to the best interest rates, but it takes consistent good habits like on-time payments and low credit utilization over time.

What is considered massive debt?

If less than 30 percent of your income is going towards debt repayment that's considered superb (especially by potential lenders). If your ratio is over 40 percent, however, that's considered to be extremely high and a sure sign that your debt is potentially getting out of control.

What is the credit card limit for $70,000 salary?

With a $70,000 salary, you could expect a single credit card limit from around $14,000 to $21,000, but potentially much higher ($30k-$50k+) or lower depending on your credit score, debt, and specific card, with some issuers offering limits up to double your income or more for excellent credit. Key factors are your credit score, low existing debt, and income stability, with premium cards often requiring higher scores and income.

What percentage of Americans are 100% debt free?

About 23% of Americans are 100% debt-free, according to recent Federal Reserve data, a figure that includes all forms of debt like credit cards, student loans, and mortgages. However, this percentage varies significantly by age, with younger adults (18-22) having much higher debt-free rates (around 54.5%) compared to older groups, and fewer than 1 in 10 people feel they've achieved true financial freedom.

Is $50,000 a lot of credit card debt?

With $50,000 in credit card debt, you owe enough that creditors might be willing to negotiate, but you also face complications that someone with smaller balances might not encounter.

Is it true that after 7 years your credit is clear?

It's partially true: most negative credit information, like late payments, collections, and charge-offs, generally falls off credit reports after seven years from the first missed payment, but bankruptcies can last up to ten years, and the actual debt itself still exists and can be pursued by collectors. The 7-year rule is for reporting, not debt forgiveness; accounts closed in good standing can stay for 10 years, and some debts have slightly different timelines, like 7 years plus 180 days for collections.

How to aggressively pay off debt?

There are two basic debt repayment strategy options: the debt snowball, which includes paying off your smallest debts first, then putting those extra payments toward the next smallest balance until you pay off your debt; and the debt avalanche, where you focus on paying off your highest-interest balances first.

What is the 2 2 2 credit rule?

The 2-2-2 credit rule is a guideline for building a strong credit profile, suggesting you have two active revolving accounts (like credit cards) open for at least two years, with on-time payments for those two consecutive years, often with a minimum $2,000 limit per account, demonstrating reliable credit management to lenders. It shows you can handle multiple credit lines consistently, reducing lender risk and improving your chances for approval on larger loans, like mortgages.

How much is a normal person in debt?

The average American owes about $105,000 in total debt as of 2024, with mortgages making up the largest chunk. Gen Xers carry the highest credit card and auto loan balances, while Millennials have the biggest mortgages. Knowing where you fall can help you assess how manageable your debt load is.

How do I pay off debt if I live paycheck to paycheck?

Tips for Getting Out of Debt When You're Living Paycheck to Paycheck

Tip #1: Don't wait. ...
Tip #2: Pay close attention to your budget. ...
Tip #3: Increase your income. ...
Tip #4: Start an emergency fund – even if it's just pennies. ...
Tip #5: Be patient.

What is the 7 7 7 rule for debt collection?

No More Than Seven Times in a Seven-Day Period

Under the 7-in-7 Rule, debt collectors are restricted to contacting a consumer no more than seven times within any seven days. This rule applies to all communication methods, whether phone calls, emails, text messages, or other forms of contact.

Which gender has more debt?

Men have 2 percent more credit card debt than women. Men have 9.7 percent more mortgage debt than women. Men have 20 percent more personal loan debt than women. Women have 2.7 percent more student loan debt than men.

How many Americans have $1000 in savings?

While exact numbers vary by survey, recent data (2024-2025) suggests roughly one-quarter to one-third of Americans have less than $1,000 in savings, meaning a majority do have $1,000 or more, though many struggle with unexpected expenses, with surveys showing 40-50% unable to cover a $1,000 emergency from savings alone, highlighting a significant gap in accessible funds despite some having higher balances.

Is being debt free the new rich?

Myth 1: Being debt-free means being rich.

A common misconception is equating a lack of debt with wealth. Having debt simply means that you owe money to creditors. Being debt-free often indicates sound financial management, not necessarily an overflowing bank account.

What credit score do you need for a $400,000 house?

To buy a $400k house, you generally need a credit score of at least 620 for a conventional loan, but you can get approved with lower scores (around 500-580) for FHA loans with a larger down payment, while excellent scores (740+) secure better rates. The required score depends more on your loan type (Conventional, FHA, VA, USDA) and lender than the home's price, with higher scores leading to lower interest rates.

What is the 2/3/4 rule for credit cards?

The 2-3-4 rule is a guideline, primarily associated with Bank of America, that limits how many new credit cards you can be approved for: 2 new cards in 30 days, 3 in 12 months, and 4 in 24 months, helping manage application frequency and hard inquiries to protect your credit score. It's not a universal policy but reflects a strategy to space out credit card applications, with other issuers having similar, though often unwritten, rules like the 5/24 Rule.

Can I get a credit card if my salary is $20,000?

If you earn Rs. 20,000 per month, you can still qualify for a credit card by maintaining a decent credit score demonstrating good credit behavior.

How much debt is unhealthy?

Debt-to-income ratio is your monthly debt obligations compared to your gross monthly income (before taxes), expressed as a percentage. A good debt-to-income ratio is less than or equal to 36%. Any debt-to-income ratio above 43% is considered to be too much debt.

What to do if you are heavily in debt?

Choose a debt reduction strategy.

Pay more than the minimum for your highest interest rate debt, while paying the minimum required for all other debts. Once you pay off your highest interest rate debt, use the extra money you have available to shift it to paying off your next-highest rate debt and continue the process.

What is considered a high-interest debt money guy?

You can move on to the next step in the Financial Order of Operations if you have no high-interest debt. High-interest debt includes consumer debt such as credit cards, car loans outside of our 20/3/8 rule, and student loans depending on your age and the interest rate.