Bankrate.com conducted a survey on the subject of rising credit card debt in early September. Nearly half of people in debt before the pandemic have seen it increase since March 2020.
The research involved 2,400 adults. More than half of them, 1297, had credit card debt. 47% of adults who said their debt had increased since the start of the pandemic linked the cause of the increase directly to the pandemic.
These conclusions contrast sharply with the latest Federal Reserve data. The Federal Reserve says credit card debt has declined significantly overall. This leads to the conclusion that these financial improvements are not universal.
“This shows how widespread and persistent a credit card debt problem can be,” said Ted Rossman, senior industry analyst at Bankrate.com. He added that the Bankrate survey clearly shows that the financial improvements “have not been shared equally by households”.
With an average annual percentage rate of around 16%, it’s no surprise that credit card debt isn’t something that people can easily get rid of. Another disturbing statistic from the survey is that the average person with credit card debt owes $ 5,525.
The survey also pointed out that 54% of adults carry their balances month to month. Half of these people have been in debt for at least a year.
Rossman said, “It tends to be a long-term type of systemic thing,” and explained some of the steps people in debt could take to get rid of it. He mentioned that borrowers can consolidate their debt with a personal loan. Another option might be to wisely reduce their spending and budget to include higher debt payments. He also believes that with the economic recovery, many banks will resume offering excellent 0% balance transfer offers – something that had dried up during the pandemic.
The Bankrate survey also asked when participants expected to be released from their debts. Most of them had a positive outlook: 30% expect to deleverage within a year, and 60% believe it will take them five years. One in 10 participants were unsure of the deadline, and only 5% were concerned that they would not be able to take on debt at all in their lifetime.