Credit Card Debt Statistics Facts and Trends

Credit Card Statistics 2017- 2018

Credit cards are a financial staple in cultures around the world, allowing consumers to experience more financial freedom, more safely trudge through financial difficulties, and find it easier to purchase trendy products. Unfortunately for us consumers, credit card lenders often experience consumers taking lengthy periods of time to pay balances back, if even paying them at all, resulting in high interest rates and low maximum balances. Debtors with less-than-ideal repayment habits have their tendencies reflected in subpar credit scores, making it more difficult to secure reasonably-priced financing in the future.

As consumer debt in the United States continues on an upward trend displayed in past years, credit cards sustain popularity. Here are a few shocking statistics about credit cards in our society today, providing a snapshot of how deep average consumers are in debt, how much they rely on credit cards, and much, much more.

Average household debt

Credit card debt is measured in a number of ways: per young adult, per adult of all ages, per United States citizen with credit reports, per cards with consistent monthly balances, and countless other manners. One popular metric that statisticians use in measuring current credit card debt throughout the United States is per household.

Not every household is considered in this calculation, as only those with current credit card debt is calculated. Approximately ninety-six-hundred dollars — that’s $9,600 — belongs to the average American household that has at least some credit card debt. With United States households holding so much debt, lenders are certain to target married couples and families to advertise their credit card offerings. Families obviously spend more money than other people or partnerships due to having hungry infant, toddler, and adolescent mouths to feed.

Preference of payment methods

Cash, credit, and debit are today’s most popular methods of paying businesses, service providers, and vendors for their offerings. Checks and money orders are largely outdated, despite being used for some functions. As previously detailed, credit cards are becoming increasingly popular in the United States.

Approximately forty percent of Americans prefer using credit cards as their go-to method of payment, trailed closely by debit cards at thirty-five percent. 2016 was the first year that credit cards surpassed debit cards as preferred method of payment. This unprecedented change is likely for credit card companies to begin targeting demographics that don’t often use credit cards in an attempt to establish as many individual accounts as possible.

Average credit card debt

This metric is different than the aforementioned average household debt, with every single American calculated into this figure. The average United States citizen’s credit card debt is currently around $5,331. Although more consumers currently have outstanding credit card balances than in the past, most of them maintain low balances. Credit card companies may start offering incentives for keeping high balances on outstanding accounts.

Rising income equals rising debt

American families that earn in excess of $157,000 shell out four times as much in interest payments as those that earn less than $22,000. More money, more problems rings very true in this statistic. Credit card lenders are certain to begin targeting families with high household incomes much more often than lower-income households.

Fraction of households with debt

Slightly more than 38% of American households currently owe at least $1 in credit card debt. Credit card companies would much rather more households maintain current credit card balances. Lenders may target households more often with offers, deals, and promotions for credit cards, rather than targeting younger consumers that recently turn 18. Younger demographics are taking on significantly more student loan debt than ever and may be risk-averse towards credit cards. As such, financially stable families may be the new target for credit card giants.

Total credit card debt

In the United States, there is currently slightly more than $940 billion worth of outstanding credit card debt. This is up from around $885 billion in the first quarter of 2016, as compared to Q1 2017. Lenders have obviously marketed more heavily in past years, and charts expect them to keep at it

Protecting Your Credit Score from Foreclosure

You’ve missed mortgage or tax payments. You’re facing foreclosure. Missing house payments and/or a foreclosure can tank your credit score. It’s the same credit score that may have allowed you to buy your home. In fact, delinquent payments can lead to your home being placed on a pre-market real estate list or instant credit score penalties.

 

Why is a Low Credit Score Bad?

A foreclosure may lead to an instant 100 point drop in your credit score. That’s not all. A foreclosure may be listed on your credit score for decades. This can prevent you from getting another home in the future. For instance, you have to wait for one to seven years to obtain a FHA-backed loan for a new home.

Even if you don’t want another home, your ability to obtain new credit may be damaged. Lenders put heavy weight on your credit score, also called FICO score. A bad credit score can me plenty of loan denials or higher interest rates if you obtain a loan.  One way to avoid foreclosure is to sell your house for cash from places like We Buy Houses.  These services offer that you can “sell my house fast” and prevent foreclosure even if your home is “ugly” or in need of drastic repairs or updates.

Can I Fix My Credit Score?

Yes. The best way to avoid a low credit score is to remain current on all your debts. Make all payments on time and for the full payment about. If you’re already behind in your payments, have a foreclosure or bad debts, you can fix your credit score in the same way. It’s possible to repair your FICO score in two years.

I want to Avoid Foreclosure and Ruining My Credit Score. Are there Any Alternatives to Foreclosure?

Yes. You have many options to avoid foreclosure. The most popular options are:
• Bankruptcy: Chapter 13 allows you to repay back mortgage payments in about three to five years. Only Chapter 13 comes with an automatic stay. This means your lender can’t continue to foreclosure process. It doesn’t matter if you’re in the beginning of the process or your house is up for auction. You’re still required to keep all payments current mortgage payments current.
Loan Modification: With a loan modification, you work with your lender to make changes to your loan to keep your home. These changes ranges from lowering your interest rate to placing missed payments at the end of your mortgage. You must make all your payments on time and in full or the lender can report the negative information to the credit bureau.
• Cash Offer: Cash offers allow you to avoid going into foreclosure altogether. You work with a company that pays you for the property. The offers are completed quickly. You don’t have to worry dealing with the lender or a low credit score. You can take the money and find another place to live and start fresh.

Can a Deed in Lieu of Foreclosure or a Short Sale Prevent a Low Credit Score?

No. These options are common alternatives to foreclosures, but they have a negative impact on your credit score.

Should I Just Hire a Credit Repair Company to Fix My Credit Score?

No. There’s no quick fix to improve a low credit score. You have to wait the required time to repair damaged credit. Although majority of credit repair companies claim they can repair credit quickly—they can’t. Delinquent payments stay on your credit history for up to seven years. A foreclosure stays on your credit history for about 10 years. No credit repair company can shorten the time period.

No one buys a home thinking they’ll end up in foreclosure. All isn’t lost if you do find yourself in any stage of the foreclosure process. You have options. Whether you consider a cash offer or Chapter 13, you can avoid damaging your credit score. Choose an option that resolves your current problems and is a fresh financial start for you.