American Credit Card Debt Up 8% over 2016
Dec 16th, 2017 @ 11:42 PM by Amber Nelson
Even as the economy makes incremental strides forward, American credit card debt moves higher, with an 8% increase in 2017 over the previous year, according to a new survey.
The 2017 NerdWallet household debt study found that total U.S. credit card debt rose to $905 billion for this year, with an average balance of $15,654 among those carrying a balance. With an average interest rate of 14.87%, credit card borrowers with the average debt load would pay nearly $1000 a year in interest.
The reasons for the rise in credit card spending and debt seem to be split. More than 2 out of 5 (41%) of survey respondents said that unnecessary purchases for things they couldn’t afford led them into debt.
Yet a third (33%) said their credit card debt was a result of paying for necessities they were unable to afford with their income. Among those necessities were medical bills and auto repairs.
The slow rise in incomes is probably partly to blame for the credit card debt jump. The median annual household income has only grown 20% during the past 10 years, but the cost of living has increased 18% over the same period. And the cost of several key spending categories has outpaced income growth significantly: food prices have jumped 22 percent, miscellaneous “other” expenses have increased 30% and medical expenses climbed 34% over the past decade.
What can consumers do to fight their way out of credit card debt? “Finding a way to put money toward paying off debt, especially high interest debt, is the best way to free yourself from the vise grip debt can have on your budget,” said NerdWallet credit card expert Kimberly Palmer. “Taking small steps, such as making sure savings are in high-yield accounts, renegotiating monthly bills and using a cash-back credit card can free up cash that can be put toward debt payments until they are paid off in full,” she says. “Also, comb through your transactions over the last few months to see what items you can cut, such as subscriptions, restaurant meals or entertainment expenses.”
Amber Nelson is a seasoned mortgage industry writer and a regular contributor to Loan.com and Mortgage101.com.