Credit cards play a vital role as long as consumer purchases in the US are concerned. A majority of Americans choose credit cards as their preferred mode of payment. Interestingly, credit cards have secured the top slot as the most preferred mode of online payment as well.
However, such a device of greater privilege and convenience can become an excuse to drive away with things you can’t afford. And it’s proven that a majority of Americans (across all ages and income levels) are very good at getting away with this excuse.
A majority of people don’t realize that holding onto credit card debt yields nothing. Rather, they lose a lot in the process. And if we don’t change this bad habit of ours, our financial picture is never going to be a perfect one.
Who is charging what?
You might think that millennials lead the way as long as credit card abuse is concerned. But this isn’t the case.
Here is a table to make you understand in a better way the average credit card debt Americans carry by age group:
| Age | Avg. Credit Card Debt |
|---|---|
| Under 35 | $5,808 |
| 35-44 | $8,235 |
| 45-54 | $9,096 |
| 55-64 | $8,158 |
| 65-69 | $6,876 |
| 70-74 | $6,465 |
| 75 and above | $5,638 |
But, did the middle-aged Americans accrue too much? College tuition costs may be a major factor. Nowadays, educational costs are always on the rise. Consequently, parents can’t help but stretch themselves financially. And sometimes are pushed to the edge where there is no coming back.
Significantly, it’s not just the low-income households who exploit their credit cards. Families earning $160,000 or more owe $11,200 in average credit card debt. These households keep on paying high interests on those costly revolving debts.
How much does it cost you?
Have you ever thought how much did it cost you? Or, how much you’ve lost? The average interest rates on credit cards have fluctuated between 12%-16% since 2005. If we take the present average balance of $5,700 among the US households, and apply a 14% interest rate, you’ll be simply wasting $440 each year. And if you take at least 3 years to pay off the sum, by the time it’s paid off, you’ve already wasted more than $1,300 in the process.
Credit card companies thrive when cardholders like you and me spend beyond our affordability and default. Again, a majority of credit card companies compound interest on a daily basis. This means just delaying a payment by a single day can cause your balance to bloat.
How do you break the cycle of debt?
Carrying credit card debt for months is just like throwing yourself into a hazy maze with no clear way out. You make your financial condition worse with every delay in your monthly credit card payments. Eventually, this takes a serious toll not only on your finances, but on your emotions too.
If you really want to break free the ominous cycle of revolving credit card debt, you need to take serious remedial steps.
