Credit Card Debt

04:53:37 AM Thursday, October 16, 2008

Credit Card Debt Statistics

According to the latest survey conducted by Standard and Poor's, American consumers experience difficulties when managing their personal debts. Due to economic hardships such as falling home prices and rising inflation, more and more consumers turn to credit cards. But the problem is, plastics are mostly used as the source of cash, rather than its substitute. About 10% of US consumers make more cash withdrawals to receive cold cash and it leads them to heavy debts. Read more about credit debt and the ways to reduce it!

Bad news is that more credit users find it difficult to meet their financial obligations. According to the research, about 14% acknowledge the fact that sometimes they're unable to pay down their balances. For 5% of users, it's always a pressing problem. 8% of cardholders make the monthly minimum payment and another 8% pay less than the required minimum.

The number of those customers who carry big balances is striking. 3% of respondents have over $40,000 in credit card debt. More than 20% carry balances between $5,000 and $20,000. What's more, there are many customers whose available credit is near to the spending limit. To be more exact, 25% max out their primary cards or near to this.

When it comes to prioritizing monthly payments, 35% of respondents chose their mortgage as the bill that would be paid first. More than 25% said that this would be their credit card bill. This survey has revealed the change in the consumer behavior. Now that the value of homes decreases, more and more people turn to credit cards as the source of funds. But the problem is that not so many people can manage their massive balances and their debts spiral out of control.

If you get sucked into credit debt and find it difficult to pay down your balances, it's high time to take actions and manage your debts. First, you need to take a close look at your income from all the sources and your expenses.

The task is to find the balance between income and expense. Avoid spending money on something you can do without. Overspending is one of the most major reasons of debt. Do your best to put more money toward your debt. It speeds up the process of paying off your balances. By making minimum monthly payments, you risk to get up to the ears in debt, as this payment covers only a small portion of your balance. The major portion goes towards interest. And if you carry a high-rate card, you are sure to have problems with paying down your balance.

Good balance transfer deals come as a smart idea in such situation. By transferring your balances onto one card with lower rates, you have good chances to pay off your balance easier and faster. This will save you a lot of money as well.

If your credit score is in a good standing, no need to pay more if you can get a better deal. 0% APR cards are ideal if you want to save on new purchases or balance transfers. When applying for a new card, pay attention to ongoing interest rates. If you tend to carry a balance over the time, the deal with low interest rates is a must-have for you. Manage your debts, otherwise, they will manage your life!