American consumers continue to reach new milestones. Not only do Americans carry a record amount of credit card debt, they’re also carrying that debt for an increasingly longer period of time. According to the latest data, 43% of U.S. adults (29-million people) who have credit card debt have had a balance for at least two years. Moreover, 15-million people, or one in four, have had credit card debt for at least five years.
Those carrying long-term credit card debt might not be those that fit the stereotype. Americans who make more than $50,000 a year are more apt to carry a credit card balance than lower-income earners.
Long-term credit card debt usually suggests that people are not using their credit card for short-term expenses, but rather are living beyond their means. This is something the credit card companies don’t mind, especially when monthly interest charges range from 15% to 25%.
“A lot of times, credit card debt can just creep up on you,” says Gerri Detweiler, author of Reduce Debt, Reduce Stress. “The problem is, once you’ve had debt for several years with interest accumulating, it becomes very hard to pay off.”
According to the survey, Generation Xers (ages 37-52) have the most difficulty paying off their monthly credit card bill with 36%. Thirty-three percent of younger baby boomers (ages 53-62) carry a credit card balance compared to 24% of older baby boomers (ages 63-71). More than a quarter (26%) of Millennials carry a credit card balance and just 19% of the “Silent Generation” is weighed down by monthly credit card debt.
The actual number of Americans perpetually in credit card debt could actually be higher. Because the survey is based on information that is self-reported, respondents might downplay both their credit card balance and how long they’ve been carrying it.
What’s driving up credit card debt? It’s not because people are splurging. They’re simply trying to make ends meet: buy groceries, pay for utilities, etc. Day-to-day expenses accounted for the biggest amount of credit card debt at 32%. This was followed by retail purchased at 16%, medical bills 12%, home repairs 10%, vacation expenses 10%, car repairs seven percent, and “something else” seven percent.
Education doesn’t seem to matter when it comes to credit card debt. In fact, the more education you have, the greater the chances are you’ll carry monthly credit card debt. More than a third (34%) of college grads carry debt, compared to just 21% of those with a high school degree or less. Why is this? Higher income earnings qualify for a higher credit limit, which might explain why they have higher balances.
Where you live influences your credit card spending habits. A large majority of those in the Midwest (64%) pay off their credit cards every month, compared to 58% of those living in the Northeast, 57% of those living in the South, and 56% of those who live in the West.
“Survey: Who is most likely to carry credit card debt?” CreditCards.com, September 27, 2017.