According to a recent survey, 45% of Americans typically carry a balance each month. (iStock)
A recent survey found that even though Americans know carrying credit card balances is a bad idea, 45% still do it regularly.
Consumers of all ages and economic backgrounds are racking up credit card debt and struggling to live within their means, and these behaviors are only getting worse, Quicken said. . investigation Said. About 77% said they own a credit card. Half (50%) of consumers with annual incomes between $50,000 and $99,000 say they rely on credit cards rather than cash for the majority of their purchases.
According to one study, Americans now have $1.8 trillion in credit card debt after accumulating a total of $48 billion in new spending in the third quarter of 2023. Recent reports on household debt From the Federal Reserve Bank of New York.
Most Americans (81%) said paying off credit cards is essential, and 64% said carrying a credit card balance is not a good idea. However, 45% typically carry one every month. Even more concerning, more than 52% of Gen Z and Millennial Americans say their credit card balances have steadily increased over the past three to five years, and among middle-class Americans, Almost half (48%) and more than a third (35%) agree with this. %) are in the highest income bracket among those who earn more than $200,000.
“Even though people know what to do and what not to do with credit cards, they often make mistakes anyway,” said Quicken CEO Eric Dunn. “This suggests that many consumers feel they have no choice.
“But credit card debt costs a lot of money, so increasing debt can actually have a negative impact on people’s financial health,” Dunn continued.
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Credit card debt derails savings goals
Increasing consumer debt burdens mean less cushion for emergencies and less money available for savings. Fifty-four percent of middle-class Americans and 56% of young adults said their current savings would not last them more than three months if they lost their source of income.
Research shows that it’s not just America’s middle class that is feeling the effects of rising debt. More than a quarter (28%) of people earning more than $200,000 a year said their savings would only last three months if they lost their source of income. Financial experts recommend that consumers have approximately three to six months’ worth of living expenses on hand. emergency savingsBut inflation and rising costs are making this goal difficult.
Inflation and rising costs are the top financial concern for more than 50% of respondents and cited as the top reason Americans are not building savings due to the recent tax law. investigation. This concern also affects Americans in higher tax brackets, with 55% of consumers with household incomes between $50,000 and $99,999 citing inflation as their biggest financial worry. The survey results say that there are.
If you’re having trouble paying off your debt, you can consider taking out a personal loan to consolidate your payments at a lower interest rate and save money each month. Visit Credible to find an interest rate that’s right for you without affecting your credit score.
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Americans are more optimistic about their finances
The good news is that Americans are becoming increasingly confident with their finances.wallet hub Economic indicators for 2024 This means consumers are more optimistic about their financial outlook this month than they were at the same time last year. Additionally, their six-month outlook for their finances has reached its highest level of optimism since December 2020.
According to the index, the percentage of consumers who expect to reduce their debt in the next six months increased by 4.4% in December 2023 compared to last year. Additionally, consumer confidence in reducing debt over the next six months has reached its highest level since December 2020.
“The 15% rise in consumer confidence over the past year is an encouraging sign that our economy is recovering from the damage sustained as a result of the pandemic and inflation,” said WalletHub analyst Cassandra Happe. Stated.
If you’re interested in paying off high-interest debt with a personal loan, visit the Credible Marketplace to learn more about your options and speak to an expert to get your questions answered.
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