Poll: 60% who have credit card debt owe their creditors at least 12 months.

As a credit card user, it’s no surprise that once you’ve accumulated a large balance, it can be difficult to pay it off within a reasonable amount of time. A new survey by YouGov for CreditCards.com found that among Americans who roll over credit card debt from month to month, 60 percent owe their creditors at least 12 months.

In addition, 40 percent of these Americans say they have been in credit card debt for at least two years, 28 percent for at least three years, and 19 percent for at least five years. Another 8% said they did not know how long they had credit card debt.

“The percentage of people who have been in credit card debt for at least a year has increased substantially—a whopping 10 percentage points from last year,” says Ted Rossman, senior industry analyst at CreditCards.com. Here’s what happens and how you can change the stats.

Why you need to pay off your credit card debt fast

Credit cards are designed to be a safe, convenient and flexible means of payment. You may pay the bill in full or in any increment that is at least the minimum amount requested. It may be wise to split large deals into several parts, but it is better not to use them for long-term debts. If you don’t have a card with an introductory offer of 0 percent APR for a year or longer, the accumulated fees will be extremely expensive.

“If you have an average credit card balance ($5,270 according to TransUnion) and only make minimum payments at an average interest rate of 18.17 percent, you will be in debt for over 16 years and end up paying a total of $11,875.” Rossman says. “It helps illustrate why it’s so important to pay more than the minimum.”

However, many cardholders do not clear their debt quickly. This year’s survey found that 29 percent of Gen Xers, 22 percent of Baby Boomers, and 12 percent of millennials with credit card debt have been in credit card debt for at least five years, while 7 percent of Gen Zers have been in debt on their credit cards. cards for five years. or more.

Reasons for Longevity of Debt

Nearly half of credit card holders who have month-to-month debt (46 percent) said the need to cover emergencies and unexpected expenses is the top reason for their credit card debt. Specifically, 11 percent said it was to cover emergency or unexpected medical bills, 10 percent for home repairs, and 10 percent for car repairs. Sixteen percent said their debt resulted from some other emergency or unexpected expense.

The inability to cover day to day expenses is also an important factor in getting into credit card debt. Twenty-four percent of those with credit card debt said their balances went to everyday expenses such as groceries, child care and utilities; 11 percent mentioned retail purchases such as clothing and electronics; and a further 11 percent said unpaid balances were related to leisure and/or entertainment expenses.

So, who has the most trouble paying household expenses and then relies on cards to close the gap? Thirty-one percent of millennials with credit card debt said their day-to-day expenses are the main cause of their credit card debt, followed by 26 percent of Generation Z, 24 percent of Generation X, and 20 percent of Boomers.

The impact of economic problems on credit card debt

“Despite the fact that the total credit card balance of Americans decreased by 4% compared to the end of 2019, according to the Federal Reserve Bank of New York, our data is further evidence of a K-shaped economy,” says Rossman. “While many people are doing better, unfortunately, many others are doing worse.”

With recession fears on the rise, 45 percent of all cardholders and 53 percent of cardholders with debt say job loss will severely impact their ability to make at least minimum credit card payments over the next year.

Rising prices for goods and services are also of concern. The survey showed that continued high inflation would have a major impact on 41 percent of cardholders overall and 51 percent of cardholders with debt.

However, the additional interest rate hike is less of a concern, with 34% of cardholders overall and 46% of cardholders in debt saying it would have a major impact on their ability to make minimum payments over the next 12 months.

You can reduce your credit card debt

While the results of these polls are alarming, not everyone is in the red. Just over half of cardholders (52 percent) currently pay all their cards in full each month, thus avoiding interest entirely.

76 percent of US adults have credit cards. 86% of boomers have them, compared to 72% of millennials, 71% of Gen Xers and 63% of Gen Zers.

The more money people earn, the more likely they are to get a credit card. 92% of people with an annual household income of $80,000 or more have at least one card, compared to 87 percent of those with incomes between $50,000 and $79,999. Only 65 percent of Americans with incomes under $50,000 have credit cards.

The higher the income, the greater the debt

Not surprisingly, maintaining credit card debt is more common among people with low incomes than among those who earn the most. The survey found that 59 percent of cardholders with annual household incomes of less than $50,000 are in debt, while 37 percent of cardholders with annual household incomes of $100,000 or more do so.

bottom line

If you already have credit card funds, Rossman suggests practicing basics like increasing your income—perhaps by taking a side job or selling things you don’t need. Review your spending and cut back as much as possible to free up money to pay off your debt faster. The sooner you take action, the better.

“It’s easy to get into credit card debt, but it’s hard to pay it off,” says Rossman. “High inflation and rising interest rates make release even more difficult. If you’re struggling with credit card debt, my top tip is to sign up for a zero interest balance transfer card. These promotions last as long as 21 months. Low-interest consumer loans and non-commercial credit counseling can also be helpful debt repayment strategies.”

Methodology

CreditCards.com commissioned YouGov Plc to conduct the survey. All figures, unless otherwise noted, are provided by YouGov Plc. The total sample size was 2,419 adults, of whom 1,834 have a credit card and 879 have a balance on a credit card from month to month. Field work was conducted August 24-26, 2022. The survey was conducted online and meets strict quality standards. It used non-probabilistic sampling using both quotas up front at the time of collection, and then a final weighting design designed and validated to ensure nationally representative results.

Erica Sandberg is a well-known personal finance professional and author of Waiting for Money: The Essential Financial Plan for New and Growing Families. Her articles and insights have been featured in The Wall Street Journal, Pregnancy, Babytalk, Redbook, Bank Investment Consultant, Prosper.com, MSN Money and Dow Jones MarketWatch. An active television and radio commentator, Sandberg is a credit and money management expert at KRON-TV in San Francisco, and a frequent guest on Forbes Video Network, Fox Business News, Bloomberg TV and all Bay Area networks. Prior to starting her own reporting and advisory business, she worked at the San Francisco Consumer Credit Counseling Service where she advised individuals, conducted educational seminars, and managed the media relations department. Sandberg is a member of the Society of American Business Editors and Writers and a member of the Project Money Advisory Committee.