Money Matters - Credit Card Debt Survey

 WalletHub analyzed Federal Reserve data released today and found that credit card debt hit $1.27 trillion in November 2023, which is 6% higher than last year, after adjusting for inflation. WalletHub now projects that credit card debt rose by $101 billion in 2023. In addition, you can find key takeaways from WalletHub’s latest Credit Card Debt Survey below.

• Debt Surge: 59% of Americans with credit card debt say they have more debt now than they did 12 months ago.
   
• Inflation Worries: 54% of Americans expect inflation to affect their credit card debt in 2024.
   
• Rate Reduction Plan: More than 4 in 5 people with credit card debt say they will try to lower the interest rate on their debt in 2024.
   
• Aiming for Debt Freedom: 84% of people with credit card debt say getting out of debt is one of their goals for 2024.
   
• Holiday Helper: 79% of Americans say their credit card was helpful during the holidays.
   
• Pointing Fingers: More than 1 in 4 Americans blame the economy for their credit card debt.

Full survey: 2024’s Credit Card Debt Survey

 
“Nearly 6 in 10 Americans with credit card debt say they have more debt now than they did 12 months ago, and the way things are going, we’ll be echoing the same exact sentiment this time next year. Inflation, record interest rates, and continued consumer overspending continue to push debt levels higher, and there’s little sign of this trend letting up.”

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“Even though people complain about high credit card interest rates and mounting debt, we’re not about to give up our credit cards anytime soon. For example, 79% of people say their credit card was helpful during the holiday season. The right credit card can indeed save you a lot of money and help you avoid cash flow problems. But you do need to be careful.”
 
- John Kiernan, WalletHub Editor


Q&A with WalletHub

What are consumers’ expectations for credit card debt in 2024?

“According to WalletHub's new consumer survey, 84% of people with credit card debt say that getting out of debt is one of their goals for 2024. Whether that goal is realistic or not is another matter. The average household will have to really cut back on spending and double down on debt payments to reverse the recent trend of rising debt, especially in the face of high interest rates,” said John Kiernan, WalletHub editor.

How can people with credit card debt reduce their interest charges?

“More than 4 in 5 people with credit card debt say they will try to lower the interest rate on their debt in 2024. One way to do this is simply to ask, as around 29% of people who’ve asked their credit card company for a lower APR have been successful in the past. Another option is to do a balance transfer. This may allow you to trade in a high APR for a 0% introductory rate, making it easier and less expensive to pay off what you owe,” said John Kiernan, WalletHub editor. “In addition, separating everyday expenses from ongoing debt will reduce your total interest charges. You can do that by using one card for everyday purchases that you can pay off by the due date and employing another card for revolving debt.”

Are consumers taking responsibility for their debt?

“More than 1 in 4 Americans blame the economy for their credit card debt, according to a new WalletHub survey, and we can expect such sentiment to linger at least as long as inflation remains high. Roughly 54% of Americans expect inflation to affect their credit card debt in 2024,” said John Kiernan, WalletHub editor.
 

4 Tips for Minimizing the Effects of High Interest Rates

1. Allocate a specific credit card solely for everyday expenses and ensure the monthly bill is paid in full. By paying the entire statement balance before the due date each month, you can prevent the accrual of interest on everyday purchases. Conversely, using the same card for both daily purchases and long-term debt will result in interest applying to the entire balance.
    
2. Opt for a balance transfer card to decrease the financial burden of existing debt. The most favorable balance transfer credit cards provide interest-free periods of up to 21 months, and attractive offers are accessible to individuals with fair credit or better. A prolonged 0% introductory period can yield significant savings on interest, aiding in faster debt repayment.
    
3. Utilize a 0% credit card for substantial expenses. When faced with a major cost that requires several months to pay off, employing a 0% credit card can shield you from interest charges. This avoids the need to commingle these expenses with everyday purchases.
    
4. Prioritize budgeting, saving, and building credit. Trimming non-essential expenditures reduces the debt subject to high interest rates. Enhanced savings and an improved credit score position you favorably to qualify for 0% cards and can reduce the risk of you falling back into debt once you pay off what you currently owe.