Americans Can’t Declare Independence from Credit Cards – Because They’re Too Dependent on Debt

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June 28, 2023

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Debt.com survey shows cardholders don’t even know their options for getting out of debt

FORT LAUDERDALE, Fla., June 27, 2023 /PRNewswire-HISPANIC PR WIRE/ — Inflation may be easing, but not enough for Americans to ease up on their credit cards. A new Debt.com credit card survey shows just over half (51%) of Americans say inflation has forced them to “carry a larger monthly credit card balance” than before prices started skyrocketing.

A new Debt.com poll shows many rely on credit cards due to price hikes and rising costs from inflation. Two years of a record-high inflationary period and multiple Federal Reserve interest rate hikes have caused Americans to fall further into credit card debt.

Even worse, 55% said “price increases from inflation made me use my credit cards to make ends meet” – and 31% maxed out their credit cards over the past two years “while inflation and interest rates have increased.”

As the Fourth of July holiday approaches, Debt.com chairman Howard Dvorkin, CPA has suggested Americans declare their independence from their credit cards. Yet he acknowledges the survey shows that’s currently impossible. “It’s one thing to identify the enemy, it’s quite another to conquer it,” Dvorkin says. “Our survey also revealed some concerns that will keep us dependent on our plastic.” Among those concerns:

Over 30% of respondents said they have maxed out their credit cards in the past two years.
The survey asked, “Do you know what your average credit card APR is?” More than 1 in 4 (38%) did not.
When asked if they considered various debt solutions – from credit counseling to debt settlement or credit card balance transfer – 58% hadn’t.

“You can’t get out of debt if you don’t understand what’s keeping you there,” Dvorkin said about the cardholders who don’t even know how much interest they’re paying every month. “And you certainly can’t get out of debt if you don’t even know the options you have.”

Dvorkin encourages all Americans with credit card debt to use the Fourth of July “to celebrate what made this country great, and that includes financial freedom as well.”

Debt.com tips to get people started:

Move from a “spend, spend, spend” mentality and start saving. You should be putting away five to ten percent of every paycheck into a saving or investment account at minimum.
Find out what your credit utilization ratios are on each credit card. The recommendation is to not use more than 30% of the credit limit. Charging more than 30% will lower credit scores, may risk interest rate increases, and credit denials.
Know your debt-to-income ratio. This measures the amount of debt a person has relative to their income level. This is a good indicator of financial health and it’s recommended to maintain a ratio of 36% or less.
Keep credit scores high. A high credit score allows you to negotiate to get the best interest rates and terms on new loans and credit cards.

About: Debt.com is a consumer website where people can find help with credit card debt, student loan debt, tax debt, credit repair, bankruptcy, and more. Debt.com works with vetted and certified providers that give the best advice and solutions for consumers ‘when life happens.’