|NEW STUDY REVEALS DEBT TRENDS AMONG AMERICANS|
|Posted on: Oct. 16, 2017 in Debt|
CreditCards.com recently released the results of a survey of over 2,000 Americans regarding their credit card habits. 65 million Americans carry credit card debt and almost half, 43%, have had balances for two or more years. What contributes to this debt? Which households are more likely to have debt? The answers may surprise you.
The study revealed that those earning more than $50,000 per year were more likely to carry a balance from month to month. For those who have a balance longer than five years, 27% are earning more than $75,000 per year. This indicates that it’s not only low-income households struggle to pay off their credit cards in full each month.
Using a credit card to pay for ordinary household expenses seems to be a contributing factor. In fact, 32% of those surveyed indicated that they use their credit cards to pay for their everyday living expenses. As American’s are not able to pay for these expenses in full each month, the debt mounts. For many, being in debt isn’t the result of a sudden one-time expense like an unexpected repair or medical emergency, but rather an accumulation of living beyond one’s means for an extended period.
As people continue to use a credit card to cover living expenses they can’t afford, they inevitably get caught in a cycle where, in addition to the day-to-day expenses they can’t afford, they are adding a debt payment. This will leave them short again and thus charging additional items. Sometimes it happens so slowly that it’s not noticeable until the debt is so large that there is seemingly no way out.
Understanding how debt accumulates can go a long way to reversing the trend and ending the stigma that debt is only for the poor, young, or uneducated. In addition to the statistic above about income, the survey also revealed that middle-aged individuals are just as likely, if not more so, to carry a balance from month to month. College graduates are more likely to have debt than those who have a high school degree or less.
It seems that those who have more access to credit or higher limits, often meaning those with higher incomes or education levels, are more likely to have higher debt. Instead of making it easier to pay off those balances and live within one’s means, lifestyle inflation.
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