Over 70 Million American Households Have Credit Card Debt That Outstrips Savings

A recent Bankrate report indicates that 74 million Americans have more debt than savings. Credit cards are the main problem in this scenario; the debt piles up as high interest rates add to the balances each month.

Although the economy is improving and unemployment rates are low, Americans aren’t doing so great managing debt levels. Only 43% of households surveyed indicated that building their savings accounts is a priority.

The average amount of credit card debt in households across America is $5,700 according to ValuePenguin. However, adjusted for the “real” cost of living, wages fell 1.3% as of the end of 2017.
In 2018, a Bankrate survey found that only 39% of Americans could cover a $1,000 financial emergency with their savings. Prioritizing paying off debt could put these households in a position to start saving more.

It’s a good idea to put minimum credit card payments on auto-pay so there’s no chance of missing a payment. Late payments not only cause a drop in FICO credit scores, they may trigger an interest rate increase that makes the debt even more difficult to pay off in a timely manner.

Moving the debt to a no-interest card or refinancing with a personal loan are also great options that will help households avoid spending extra money on interest charges.

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5 years ago