Within high-interest rates and inflation, a lot are using credits cards, and 39% of Americans are struggling to make ends meet, trying to manage growing and difficult to handle Americans credit card debt.
Americans Credit Card Debt Concerns
Credit card debt is notorious for its high costs, and these expenses have increased even further in the past year. A recent survey by Quicken Inc. investigating consumer behaviors and attitudes towards credit card debt reveals a growing dependence on credit cards, leading to accumulated Americans credit card debt that individuals are struggling to settle. The survey indicates that 35% of Americans won’t manage to clear their balances by year-end, and this includes even high earners with yearly incomes of $150,000 or more.
Due to increasing interest rates, inflation, and joblessness affecting the current economic situation, a significant number of individuals are turning to credit cards for expense coverage. Quicken Inc.’s research reveals that 39% of Americans are living paycheck-to-paycheck and feeling trapped. The sentiment is particularly strong among households making less than $50,000 yearly (55%) and Millennials (49%).
Increasing work hours and decreasing expenditures
A significant number of survey participants are adapting by increasing their work hours and reducing their spending. Quicken’s investigation indicated that 62% of employed Americans are contemplating taking up an additional job in the coming six months, while 31% are preparing to seek out a second job during that timeframe. Furthermore, there’s notable attention given to cutting expenses, as 25% of Americans acknowledge the requirement to be more frugal because of their existing credit card debt.
Americans are actively making moves to decrease their potential interest expenses. As per a recent NerdWallet study, 15% of Americans have ceased using credit cards entirely to evade the burden of higher interest rates. Similarly, an additional 15% have utilized balance transfer credit cards as a strategy to economize on the increasing interest rates associated with credit cards.
The increasing accumulation of Americans credit card debt might result from individuals depending more on credit cards and less on their saved money to cover expenses, as indicated by research conducted by economists from the Federal Reserve Bank of Atlanta. In a paper from 2022, researchers coined the term “borrower-savers” to describe a phenomenon where people had sufficient cash to settle either their bills or credit card balances, but not both. Consequently, they carried credit card debt because they prioritized bill payments. Earlier studies have demonstrated that anywhere from 40% to 48% of the population fits this category, depending on the year.