Next video:
Loading the player...

Almost everyone at some point carries a credit card balance or misses a bill payment. But how do you know when the sum of those lapses has left you on financial thin ice? These four signs can help you spot danger ahead.

Number 1, you have no emergency savings. Having no cash stashed for a medical emergency or a car accident may force you to borrow just to cover your basic financial obligations, like rent and food. Research has shown 24% of Americans have more credit card debt than emergency savings, and 28% have no savings at all. Put away at least six months of living expenses, just in case.

2, you took out a payday loan. These short-term loans are a bad idea. If you annualize the interest and fees that come with such loans, the annual rate ranges from 400 to 500%. Bank or credit card loans are better options.

3, you’re only making the minimum monthly payments on your debts. Lenders keep minimum monthly requirements low in the hopes your balance will pile up interest. For example, consider a credit card with a $1,000 balance, an 18% annual interest rate, and a minimum monthly payment of interest plus 1% of the balance. If you just pay the minimum, it will take you 113 months and $923 in interest to pay it off.

And 4, you stopped saving for retirement. After meeting your daily obligations, put what you can in your retirement fund. That gives your money time to grow so you can enjoy your golden years.

  1. No results found.
Related Articles
  1. Personal Finance

    4 Signs You're Headed For Financial Trouble

    These four situations that should set off alarm bells.
  2. Personal Finance

    Why Making Minimum Payments Gets You Nowhere

    Getting out of debt can be difficult, but paying off a minimum balance each month only makes things worse.
  3. Personal Finance

    6 Major Credit Card Mistakes

    Avoid these pitfalls to keep your credit score healthy and your debt under control.
  4. Personal Finance

    Should You Use Credit Cards To Fund Your Business?

    We give you 4 reasons to consider using a credit card instead of a business loan to fund your business, and how to be smart about it.
  5. Personal Finance

    How Credit Cards Affect Your Credit Rating

    The average American household has four cards, but does that mean more is better?
  6. Personal Finance

    How to Pay Off Credit Card Debt This Year

    When you look at the numbers, debt seems to have become an American way of life.
  7. Personal Finance

    Cut Credit Card Bills By Negotiating a Lower APR

    Reducing the rate charged on your credit card balance is the first step to getting out of debt.
  8. Personal Finance

    Take Control Of Your Credit Cards

    The plastic in your wallet doesn't have to hurt your finances. Learn how to manage it responsibly.
Hot Definitions
  1. Stop-Loss Order

    An order placed with a broker to sell a security when it reaches a certain price. A stop-loss order is designed to limit ...
  2. Acid-Test Ratio

    A stringent indicator that indicates whether a firm has sufficient short-term assets to cover its immediate liabilities. ...
  3. Floating Exchange Rate

    A country's exchange rate regime where its currency is set by the foreign-exchange market through supply and demand for that ...
  4. Taxes

    An involuntary fee levied on corporations or individuals that is enforced by a level of government in order to finance government ...
  5. Impaired Asset

    A company's asset that is worth less on the market than the value listed on the company's balance sheet. This will result ...
  6. Solvency Ratio

    One of many ratios used to measure a company's ability to meet long-term obligations. The solvency ratio measures the size ...
Trading Center