What is the debt to credit limit ratio if the balances due on two credit cards equal $21,000 and their combined credit limit is $30,000?

To determine the debt to credit limit ratio, you need to calculate it by dividing the total balances due by the combined credit limits. In this case, the balances due on the two credit cards are $21,000, and their combined credit limit is $30,000.

Start by performing the division:

[ \text{Debt to Credit Limit Ratio} = \frac{\text{Total Balances}}{\text{Combined Credit Limit}} = \frac{21,000}{30,000} ]

When you perform this calculation, you get:

[ \frac{21,000}{30,000} = 0.70 ]

To express this as a percentage, you multiply by 100:

[ 0.70 \times 100 = 70% ]

This means the debt to credit limit ratio is 70%. This ratio is significant because it reflects how much of your available credit is being utilized. A ratio of 70% suggests relatively high credit utilization, which can impact a person's credit score and ability to obtain additional credit.

Understanding this ratio is crucial for effective financial management and can guide you in making informed decisions about credit usage and debt management.