Are you tired of being trapped in longterm credit card debt? Don’t worry, you’re not alone. Discover the shocking statistics surrounding this burdensome cycle and unlock effective strategies to break free. Take control of your finances and achieve the financial freedom you deserve. Read on to find out how.
Discover the shocking statistics surrounding long-term credit card debt and learn effective strategies to break free from this burdensome cycle. Millions of Americans find themselves trapped in never-ending credit card debt, but with the right steps, you can regain control of your finances and achieve the freedom you deserve.
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For many Americans, credit card debt is a long-term commitment.
A new survey from CreditCards.com finds that 59 percent of all credit card holders currently carry a balance on at least one card. Among those who are in debt, 56 percent have been so for at least a year.
And it doesnt end there:
- 37 percent have been in debt at least two years.
- 23 percent have been in debt for at least three years.
- 14 percent have held onto their debt for at least five years.
Meanwhile, 7 percent of people with credit card debt cant recall how long theyve carried a balance.
That translates to about 39 million Americans who have been carrying credit card debt for at least the past two years.
The study sample consists of 2,504 nationally representative adults aged 18 and up, including 1,775 credit cardholders and 1,038 with credit card debt. The survey was conducted Jan. 23-25, 2019.
I think this underscores the key point that compound interest can really work for you or against you, says Ted Rossman, industry analyst at CreditCards.com, a Bankrate sister site.
Whereas investing at an early age can make a huge difference in your overall earnings by the time you reach retirement age,
Unfortunately with credit card debt, the opposite is true, Rossman says. These numbers really work against you in a hurry.
Why were going into debt — and staying there
Chris Roane is no stranger to long-term debt. Before paying off nearly $50,000 in one year, Roane had been in credit card debt for nearly his entire adult life.
My experience started immediately after high school, says the 35-year-old web developer who lives in Billings, Montana. I really didnt have a good mindset with money.
There wasnt one catalyst that began Roanes debt cycle. Small purchases started adding up, and then emergency expenses inevitably arose.
It wasnt necessarily just crazy spending, he says. Some of it was, but some of it was not having an emergency fund, so we would have to put our extra expenses onto a credit card. It just snowballed from there.
The same can be said for many Americans caught in a cycle of debt.
The CreditCards.com survey finds that a total of 35 percent of respondents cited unexpected emergency expenses as the biggest reason theyre carrying a balance from month to month:
- Car repairs: 14 percent of respondents.
- Medical bills: 12 percent.
- Home repairs: 9 percent.
But many also took on debt by accumulating expenses. Day-to-day budget items like groceries and utilities represent 28 percent, while 27 percent of people say their debt was a result of retail or vacation spending.
Once you begin to carry a balance and accrue interest, its tough to escape.
As my income grew over the last 15 years, I would find myself in this constant struggle of getting into debt, feeling bad about it, trying to pay it off and then just repeating that cycle and not really getting to a spot where my net worth was increasing, Roane says.
And the longer that cycle lasts, the more interest accrues. The average APR on variable-rate credit cards is 17.8 percent.
Thats why, Rossman says, its important to know what your options are and start prioritizing debt payoff sooner rather than later.
How to get out of long-term debt
Before tackling debt, make sure you have a buffer for emergencies.
I think when youre starting out on this process, its important to get some emergency savings in the bank, Rossman says. I would say start out by shooting for at least one months worth of expenses. Make that your first priority.
Then start aggressively tackling your high-interest debt.
Thats where we can recommend balance transfer cards as a great option to pause the clock on that interest and give you a beneficial tail wind, Rossman says. The opportunity to pay no interest and no transfer fees for 15 months, or if you are willing to pay a transfer fee, zero percent up to 21 months, thats my No. 1 tip for people in credit card debt. It can really be a huge savings.
Another recent survey from CreditCards.com found that nearly half (49 percent) of Americans dont know that transferring their balance to a new card with zero percent interest is an option.
A lot of people dont know about balance transfers, and a lot of people assume that they wont qualify, but I would counter that by saying that most people will qualify, Rossman says. Typically you need a credit score of 670 or above, and the average is a little over 700.
Even if the 12 or 15 month introductory period isnt enough to pay off your full balance, it can give you a head start.
These interest rates are just so high that the ability to pause that for over a year, its really too good to pass up, Rossman says.
If a balance transfer isnt for you or you dont qualify, you may also consider consolidation through a personal loan. Personal loans allow you to consolidate your balances into one monthly payment, usually at a fixed, reduced interest rate.
No matter how you consolidate, do what you can to increase your payments as much as possible too.
Getting out of debt does require sacrifice, Rossman says. It might require taking on a second job for a time. It might require cutting expenses or selling some things around the house. The balance transfer option is great, but ultimately you need to either raise the amount of money thats coming in or cut the amount of money thats going out.
Learn more:
- Balance transfer calculator
- How to keep your debt from following you to the grave
- Best balance transfer credit cards of 2021
This editorial content is not provided or commissioned by any of the referenced financial institutions or companies. Opinions, analysis, reviews or recommendations expressed here are the authors alone, not those of any financial institutions or companies, and have not been reviewed, approved or otherwise endorsed by any such entity. All products or services are presented without warranty. Bankrate.com is an independent, advertising-supported publisher and comparison service. This post contains references to our partners, and Bankrate may be compensated in exchange for featured placement of certain sponsored products and services, or your clicking on certain links posted on this website.
Thanks to Source: https://www.bankrate.com/finance/credit-cards/many-americans-carry-credit-card-balance
long-term credit card debt
