Are you struggling to make a real dent in your credit card balances? According to recent data you are not alone.
According to a comprehensive study by NerdWallet Americans owe an estimated $905 billion in credit card debt, an increase of 8 percent over the last year. That broken down into understandable numbers is roughly $15,654 per indebted American. And that’s just credit card debt.
In the study NerdWallet analyzed the spending habits that are leading to increased debt and found that more than 27 million people are putting medical costs on credit cards. Since medical costs have skyrocketed 34% in the past decade (and are some of the costliest in the world) this has only lead to more debt and more interest.
However, putting healthcare on a credit card is the only option for many people since income has not increased to keep pace and many Americans simply don’t have a savings account to turn to.
Those who don’t charge medical bills can attribute their debt to increasing costs of food and beverages (also outpacing income), housing, periods of unemployment or under-employment and just generally spending more than they have on things they don’t need.
If you are someone who pays off your balance in full every month interest is something you never really have to deal with but for us ‘revolvers’ (a fun term that describes consumers who roll over balances month-to-month) you can quickly find yourself paying more on accrued interest than on your actual principal balance.
According to the study the average American pays $904 in interest on their credit cards each year. Imagine what you could do with an extra $1,000 every year?!
Credit card debt is some of the toughest to get rid of because of crippling compounding interest. Unfortunately the Federal Reserve will likely raise the interest rate for a third time this year before 2017 ends.