Report Finds that More Americans Carry Credit Card Debt for Longer Periods of Time
A recent survey conducted by YouGov for CreditCards.com reports a 10 point rise from last year in the number of people who have been in credit card debt for 12 months or more. According to the survey, 60 percent of consumers who carry over credit card debt from month to month have owed their creditors for at least a year, with 40 percent of these saying they carried balances for two years, 28 percent for three years, and 19 percent for at least five years. Eight percent did not know how long they have carried a debt.
“If you have the average credit card balance ($5,270 according to TransUnion) and you make only the minimum payments at the average interest rate of 18.17 percent, you’ll be in debt for more than 16 years and will end up paying a grand total of $11,875,” said Ted Rossman, a senior industry analyst for CreditCards.com. He said this illustrates why it is important to pay more than the minimum whenever possible.
When looking at the reasons consumers carry debt from month to month, 46 percent of those surveyed said it was due to covering emergencies and unexpected expenses, such as emergency or unexpected medical bills (11 percent), home repairs (10 percent), and car repairs (10 percent). 24 percent of those carrying debt said their balances resulted from day-to-day expenses (groceries, childcare, utilities), 11 percent said it was from retail purchases (clothing and electronics), and 11 percent said it came from vacation and/or entertainment expenses.
Because high inflation and rising interest rates are making it harder to pay down high balances, Rossman says that consumers should look into balance transfer cards offering a 0% balance for a period of time, in addition to low rate personal loans and nonprofit credit counseling.
The total sample size of the poll was 2,419 adults, of whom 1,834 had a credit card and 879 carried a balance from month to month. The poll was conducted between August 24-26.