More Consumers Rolling Over Credit Card Debt from Month-to-Month

Jan 16, 2023Financial Literacy, News

A new Bankrate report released last week found that the number of adults carrying credit card debt from month to month jumped six points from last year to 35 percent. It also found that roughly 46 percent of credit card holders don’t pay their cards off in full each month, up from 39 percent a year prior. Nearly 43 percent of those with credit card debt are not aware of the interest rates associated with their card.

“People may not be fully aware of how expensive credit card debt—or other alternative loans—are, and that interest on these loans compounds,” said Columbia Business School professor Michaela Pagel in an email to Bloomberg. “If somebody rolls over $5,000 of credit card debt over five years, it balloons into $12,441 at 20 percent interest.”

Consumers are struggling with monthly payments that have become more expensive, as interest rates are expected to hit a 40-year high this year, and more car payments exceed $1,000 a month. Recent data from the Federal Reserve found that consumer borrowing rose $28 billion last November from the month before, topping the median prediction of $25 billion.

Government data also showed in December that wage growth was slowing down amid inflation, and that those who make more money are more likely to pay their credit card bills in full. 45 percent of those making less than $50,000 annually paid their balances in full each month, compared to 63 percent of those making $100,000 or more.

“It is more expensive to buy goods and services that households need,” said Pagel. “These increased costs of living might be reflected in credit card balances and households may have trouble meeting their obligations if their wages stayed constant.”

Bankrate commissioned YouGov to conduct the survey, which had a total sample size of 2,458 adults in the United States including 1,876 credit card holders and 849 who carry credit card debt from month to month. The survey was conducted between December 7-9, 2022.

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