Credit card debt: more than half of US credit card holders will take at least a year to pay off their debt

Lisa Real had her first credit card at the age of 18 – and since then she has credit card debts. For about 14 years, the 32-year-old made the minimum monthly payment for everything from dinners to home repairs.

Although Real is proud to never miss a payment, she had accumulated $ 20,000 of debt in October of last year on six credit cards. When she connected to her accounts, she realized that it would take her 22 years to finish paying off this debt.

"Honestly, I thought I would be dead before paying the payments," Real said.

For many Americans, credit card debt is the unfortunate gift that continues to accumulate, especially because of the interest generated by the minimum payments. If you're like 39 million cardholders, you probably have a credit card balance for at least two years, according to a new CreditCards.com poll released Thursday.

More than half of the cardholders had been in debt for at least a year and had a balance on at least one card. Another 8 million do not remember the last time they were not in debt.

YouGov Plc conducted the survey on CreditCards.com, contacting just over 2,500 adults, including approximately 1,780 credit card holders and 1,040 with credit card debt.

Races, not races

While credit card debt is generally described as the result of irresponsible spending, such as shopping, the survey found that this was not the case. Nearly two-thirds of Americans who have credit card debt accumulate it most often because of emergency expenses, such as car repairs or medical bills, or daily expenses, such as groceries or services. public.

Millennials were generally more stressed by credit card debt than older generations and also more likely to be in debt for groceries or to keep their children. Baby boomers were more likely to report using credit cards for their medical expenses. In total, almost two-thirds of respondents said they use credit cards because they can not afford the necessary expenses.

"Generally, it's people's lives," said Ted Rossman, an industry analyst at CreditCards.com.

Increasing inequality

Expenses have a high price, with interest rates reaching a record of 17.55%. Rossman said that this rate is actually at the bottom because people can be charged higher rates based on their credit score or issuer.

This has exacerbated income inequality in the United States, particularly because low-income cardholders are the most likely to have credit card debt.

"There are people who are doing very well, and a number of people have been left behind," Rossman said.

For people struggling with credit card debt, here are some tips:

• Do not fall for the rewards. Although credit card rewards are satisfactory, it makes little sense to pay more than 18% interest to get 1 or 2% reward. "You should only worry about rewards if you pay the entire bill," Rossman said.
• Give priority to lower interest rates. Sign up for balance transfer cards, which move the balances to a new, lower interest rate card, making it easier to repay the debt. Look specifically for balance transfer cards that do not charge a transfer fee.
• Build emergency savings accounts. Financial experts recommend savings of three to nine months, but even a few hundred dollars can be a buffer between your debts and your credit cards.
• Stay on the right side of compound interest. Every dollar invested can generate interest and generate additional long-term revenue. If you accumulate interest on your credit card debt, reduce your expenses or generate additional income to pay off your credit card debt faster, the total amount will accumulate quickly.