PHILADELPHIA (KYW Newsradio) — It may come as no surprise that nearly half of Americans are grappling with credit card debt. A new survey conducted by Bankrate revealed that a significant portion of these individuals have carried that debt for more than a year.
A recent survey of more than 2,500 adults finds that cardholders are not using the credit for frivolous expenses, says Ted Rossman, senior industry analyst at Bankrate.
“The No. 1 cause is an emergency expense—some sort of unexpected medical bill, home repair or car repair—followed by day-to-day expenses in second place,” Rossman said.
The average credit card rate has fallen a little, but it's still over 20%, says Rossman. And according to TransUnion, the average credit card balance is $6,380.
“Credit cards represent the highest debt cost for most households,” Rossman said. “We’re talking three, four, five times more than most people are paying for things like mortgages, car loans, and student loans.”
There is a notable correlation between high interest rates and rising inflation. As central banks raise interest rates to combat inflation, the cost of borrowing for consumers and businesses increases, further influencing economic activity and prices.
“We’ve seen a sharp increase in the past few years in credit card balances, largely because everything costs more. Inflation is a big part of the story,” Rossman said. “But also those higher interest rates. That’s a tough cycle to break.”
Rossman said, 54% of Gen Xers are in credit card debt.
“I feel like they're living those expensive sandwich years where maybe they're still supporting their own kids. At the same time, they might be supporting elderly parents."
Further, while lower-income households are more likely to have credit card debt, higher-income households are more likely to hold it over a longer period of time.
The survey also found that women were more likely to have credit card debt.
Carrying a credit card balance is like taking money away from your future self, Rossman said. He recommends three steps for cardholders: include debt repayment in your budget, apply for a balance transfer card, and seek assistance from a credit counselor.
Rossman encourages cardholders to make paying down credit card debt a priority in 2025.