Nearly half of Americans (47%) are carrying credit card balance month-to-month, a new study reveals, with 72% of the debt holders over $1,000. With the expected rise in interest rates, this is resulting in a massive debt load that may get worse in the coming years.
A new survey of 1,000 Americans who owned at least one credit card exposes how Americans use it and how burdensome credit debt can be. The poll was commissioned by real estate company Clever and conducted by online survey software, Pollfish.
Fifty-six percent of the respondents said they’ve been carrying the credit card debt for at least a year. Most will still bear in the coming years. About 20 percent said it would most likely take over three years for them to clear their debt while around 8 percent are clueless when they can be free from it.
Tommy O’Shaughnessy, a Clever Real Estate analyst, said in a report that he is shocked to find how many Americans are carrying credit card balances month-over-month. He noted that with the APR sitting at 17.65 percent, debt increases rapidly and may be harder to manage for families with lower income.
O’Shaughnessy stated that their company embarked on the study to determine if credit card balances would significantly affect significant life purchases especially buying a home. Credit card debt has a great impact on financial futures.
CreditCards.com’s credit industry expert, Tedd Rossman, stressed in another interview that every extra dollar must be directed to paying credit card, especially that interest imposed on monthly balances can swiftly rise. A huge chunk (41%) of the respondents are even unaware of the current interest rate on their credit card.
Rossman also noted that people should treat it as an investment with over 17 percent guaranteed average return or even higher than 20 percent given what they’re settling up with interest.
Moreover, the study unveils that even daily expenses can place some Americans into debt. Groceries topped the list of expenses that add to credit card holder’s balances. Forty percent of the respondents said they use it for car repairs, 30 percent utilize it for medical bills, and 28 percent cited paying for essentials like rent and utilities.
One good find in the survey is that millennials (ages 18 to 34) tend to be more financially responsible. Sixty-two percent of the said group can pay off their balance month-over-month compared to their older counterparts (aged 35 and up) who were only at 48 percent.