Credit Card Debt surges as Americans struggle to stay afloat with soaring costs.
More Americans are racking up credit card debt as they struggle to make ends meet during record-setting inflation, a new survey says.
A report from Creditcards.com found that 60% of credit card holders are now carrying balances for at least a year, a 10% increase from last year.
"It's even harder to get out of debt when it's spending on necessities that got you into that position in the first place," said Creditcards.com senior analyst Ted Rossman. "These expenses aren't easily avoided."
With inflation surging between 8% and 9%, people are paying far more for basic necessities such as food, gas and energy. And using plastic for those everyday needs is growing, the study found.
"Credit card debt is easy to get into and hard to get out of," Rossman said. "High inflation and rising interest rates are making it even harder to break free."
And robbing Peter to pay Paul carries a ridiculously high price.
The average balance for credit card holders is $5,270, according to TransUnion.
If "you only make minimum payments at the average interest rate of 18.17 percent, you’ll be in debt for more than 16 years and will end up paying a grand total of $11,875,” Rossman said. “This helps illustrate why it’s so important to pay way more than the minimum.”
Of those carrying credit card debt, 24% said their purchases were for groceries, childcare and utilities. Clothing and electronics accounted for 11% and another 11 % said the debt came from vacation and entertainment costs.
Many said losing their job would seriously affect their ability to pay off credit card debt. Some 53% of credit card holders with outstanding balances said becoming unemployed would have a "major impact" on being able to make even the minimum payment on their cards.
Rossman advises those struggling with credit card debt to apply for a card offering the option to transfer an existing balance at 0% interest. "These promotions last as long as 21 months," he said. He also suggested low-rate personal loans and nonprofit credit counseling as ways to bring down debt and manage finances.
