About half of Americans with credit cards are in debt, and about half of those folks have been in debt for over a year, according to a Bankrate survey.
About half of Americans with credit cards are in debt, and about half of those folks have been in debt for over a year, according toAnd much of that credit card debt is fueled by emergency expenses or simply day-to-day living.
“In some respects, we expect credit card balances to grow over time,” Bankrate senior industry analyst Ted Rossman said.Americans have $1.2 trillion in credit card balances, but those should increase as the population grows and more people swap cash for cards. “What's really important at the household level is do you pay it off right away or not?” Rossman said. “And that's where I hearken back to that industry saying about, ‘Credit cards are like power tools. They're either really useful or dangerous, depending on how you use them.’”Just over half, 52%, said they pay their credit card balances in full to avoid interest.But for the 48% who told Bankrate that they carry a credit card balance from month to month, the debt can snowball with credit card interest rates hovering around 20%. “The conventional wisdom is that they're being irresponsible,” Rossman said of people who accumulate credit card debt. “But I want to refute that and point to survey data that shows that it's usually practical stuff.” Nearly half, 47%, of debtors told Bankrate that some kind of emergency or unexpected expense was the biggest reason for their situation. That included 15% who said they had emergency or unexpected medical bills, 9% who said they had emergency car repairs, and 7% who cited emergency home repairs.Only one in four Americans have the recommended six-month cushion saved up, he said.found about half couldn't pay a $1,000 emergency charge out of their savings. The new survey found 28% of credit card users with debt got underwater from groceries, child care, utilities or other day-to-day expenses. Rossman said that’s been all too common the past few years with wage growth falling behind inflation for a lot of people. “All of this sounds very negative. So, I don't want to be negative,” he said. “There are some things you can do.” One path to help could be a 0% balance-transfer card that would pause the interest clock for up to 21 months.to help them pay down their debt.people need to cut through the stigma of debt to get the help that’s available to them.RELATED STORY:The first step is just creating a budget, he said. Most of the clients MMI works with haven't created a formal budget to understand what's coming in and what's going out.creditors are incentivized to work with you. Rossman said folks with credit card debt can take on a side hustle, sell stuff they don't need or cut their expenses.Minimum payments for the average balance at the average rate would keep someone in debt for two decades, he said.
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