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Published Thu, Feb 21, 2019 8:28 AM ESTUpdated Thu, Feb 21, 2019 11:37 AM EST

Consumer debt hits $4 trillion

Americans’ collective debt surpasses $4 trillion for the first time.

As of this month, outstanding consumer debt exceeded $4 trillion for the first time, according to the Federal Reserve.

Increasing credit card debt added more than $41 billion in outstanding balances at the end of 2018. At these levels, consumers are spending about 10 percent of their disposable income on nonmortgage debts, including credit cards, personal loans and medical bills.The average American has a credit card balance of $4,293, according to the latest Experian data. Total credit card debt is also at its highest point ever, surpassing $1 trillion, the Federal Reserve found.At the same time, credit card interest rates have never been higher. The average card interest rate is currently 17.41 percent, according to the latest report. That’s up from 16.15 percent one year earlier and 15.22 percent two years ago.

Published: Feb 24, 2019 1:26 p.m. ET

More Americans are taking longer to pay off their credit-card debt

Around 37% of credit card holders — some 39 million Americans — have been in debt for at least two years.

  • Another 56% of respondents report being in debt for at least a year, while nearly one quarter (23%) have held their debt for at least three years.
  • Even more concerning: Some people don’t even know how much debt they have: 7% of credit-card holders cannot recall how long they have carried a balance.

Why Americans are stuck with credit-card debt

Emergencies are a major driver behind this trend, which is not surprising given that nearly one-third of Americans have more credit-card debt than they do emergency savings, a figure that has grown over the years.

More than 1 in 3 consumers with credit-card debt attributed it to emergencies, including car repairs (14%), medical bills (12%) and home repairs (9%).

But 28% of consumers who have been carrying credit-card debt said day-to-day expenses such as groceries or utilities were to blame. A smaller share of people (27%) said their debt stemmed from discretionary spending.