For many Americans, credit card debt has become more than a temporary financial inconvenience. The rising costs of essentials like groceries, housing and utilities have pushed more consumers to rely on credit cards for day-to-day living. But the consequences of carrying that debt can extend beyond monthly interest charges.
Here are five ways credit card debt can quietly follow you into almost every major financial decision.
1. It Can Limit Where You Live
Credit card debt itself won’t stop you from finding a place to live, but its domino effects can.
Many landlords run credit checks as part of the rental application process. While requirements vary, elevated credit card debt usually means a lower credit score and a higher debt-to-income ratio, which can make it harder for renters to qualify for apartments.
When a landlord checks your credit report, they’re looking for signs that you can pay your bills on time. A small amount of credit card debt is common, but multiple missed payments, high utilization ratios and collection accounts will give any landlord pause.
Now, this doesn’t mean you won’t be able to find a place to live if you have credit card debt. You just may have to make some concessions — like a higher security deposit or needing a cosigner. You might also have better luck with a mom-and-pop type of landlord versus a large property management, because you can explain your financial situation to the person making the decision.
And remember, high monthly credit card payments mean you have less for rent, which limits your housing choices.
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2. It Makes Borrowing More Expensive
This is another domino effect of excess credit card debt. Even if you pay your bills on time, a large amount of debt means a high credit utilization ratio — which means a lower score. And a lower credit score means you’re not eligible for those better interest rates. You may end up paying more for auto loans, personal loans, new credit cards and more.
Let’s compare two borrowers: Borrower A and Borrower B both apply for a new car loan worth $50,000. But Borrower A has more revolving debt than Borrower B. So Borrower B — who has less debt and a higher credit score — is approved for an annual percentage rate of 6.27%. While Borrower A — who has more debt and a lower credit score — is approved for an APR of 9.57%.
After five years, Borrower A will have paid $13,108 in interest. Borrower B will have paid $8,375.
3. It Can Raise Your Insurance Costs
This might come as a surprise, but in many states, insurance companies use credit-based insurance scores when determining rates for auto and homeowners insurance. The seven states that don’t allow this or have specific rules covering the practice include California, Hawaii, Maryland, Massachusetts, Michigan, Utah and Oregon.
For everyone else, a credit-based insurance score is a three-digit number derived from your credit report data as a way for insurance companies to predict the likelihood that you’ll file a claim in the future. As a result, consumers with lower credit scores or high levels of debt may pay more for coverage, even if they have a safe driving record or no recent claims history.
[Read: Credit Cards for Building Credit]
4. It Can Impact Job Opportunities
Credit card debt may also affect professional opportunities, particularly in industries that involve financial responsibilities or security-sensitive work.
Some employers review credit reports during the hiring process, though the practice is restricted or regulated in certain states. It’s best to research if your state (and possibly city) have any specific rules about the practice.
Employers can’t see your credit score, but they can see information like payment history, outstanding debt and accounts in collections. Negative marks on your credit report may not automatically disqualify you from employment, but potential employers may view your elevated debt as a potential risk factor in certain roles.
Debt can also influence your career in a less visible way. Consumers with large balances may feel less financially secure, unable to leave stressful jobs, relocate for better opportunities or take risks (like starting their own business). In many cases, too much credit card debt limits your financial flexibility, putting you at the mercy of your creditors.
[Read: Low Interest Credit Cards]
5. It Slows Down Wealth-Building
Perhaps the most significant long-term effect of credit card debt is the way it can delay wealth-building.
Money spent on interest payments is money that can’t be directed toward your other financial goals, like retirement, investments or an emergency fund. Over time, that trade-off can become increasingly expensive. For example, someone spending hundreds of dollars every month on interest payments might postpone contributing to their retirement accounts during prime investing years, missing out on greater growth.
Debt can also make you more financially vulnerable. Without proper savings, an unexpected medical bill or car repair could push you deeper into debt, creating a cycle that’s difficult to break.
The danger of credit card debt isn’t always immediate. More often, it’s a gradual erosion of financial flexibility and future opportunities.
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5 Ways Credit Card Debt Quietly Follows You Into Every Part of Life originally appeared on usnews.com