86 million American consumers fear maxing out a credit card: Report

Despite the dangers of high-interest loans, more consumers are testing the limits of plastic.

To that point, more than 1 in 3 people —or 86 million Americans — said they’re afraid they’ll max out their credit card when making a large purchase, according to a new WalletHub credit cards survey. (Most of those polled considered a large purchase as anything over $100.)

“Maxing out your card essentially means you are over-utilizing your credit,” said Jill Gonzalez, an analyst with WalletHub.

“You are not going to be able to pay that off in a timely fashion,” she added, resulting in higher interest payments and damaging your credit score in the long run.

Still, most Americans continue to take on ever-increasing amounts of debt. According to data from the Federal Reserve, the U.S. surpassed $1 trillion in credit card debt — the highest level since the Great Recession.

The average household is carrying a $6,929 balance month to month and coughing up about $1,140 a year in interest, according to a separate report by NerdWallet.

More from Personal Finance:
Holiday debt could take years to pay off: report
3 steps to keeping your resolutions to spend less, save more
7 shopping hacks to keep your spending under control

Certain groups are more prone to maxing out their cards than others, WalletHub found.

For example, men were 15 percent more likely than women to have maxed out a card, as were Millennials when compared to older generations, particularly boomers. And, not surprisingly, lower income card holders had a greater chance of maxing out a card on a big-ticket item than their higher-earning counterparts.

At the same time, credit card interest rates have never been higher, setting the stage for potential problems for those at-risk consumers.

The average card interest rate is currently at a record 17.41 percent, according to CreditCards.com’s latest report. That’s up from 16.15 percent one year earlier and 15.22 percent two years ago.

WalletHub polled more than 500 people in January.

Source link

Share with your friends!

Products You May Like

Leave a Reply

Your email address will not be published. Required fields are marked *

Get the latest Business news
straight to your inbox

Subscribe to our mailing list and get interesting stuff and updates to your email inbox.