July 31, 2009
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Credit Card Debt Mess, Pt.4
What Are They Spending It On.Some of the areas included in the survey were non-essential goods like dining out, movie rentals, DVD's; car repairs; home repairs; major non-essentials like vacations and flat screen TV's; major household appliances; new business startup; job loss; relative debt; and school tuition. Non-essential expenses contributed to 48% of the respondents indicated that non-essential items contributed to the greatest frequency of credit card use. The second reason for credit card spending was for car repairs and third was for home repairs. Paying for a child's tuition was at the bottom of the list with only 9% reported using their credit card for managing school expenses. Households that had the highest average balance of $13,302 reported having to use their cards to pay for essentials like rent.
The report also investigated the effects of credit card debt on Americans. They found that higher stress levels were associated to card spending for basic living expenses. Additionally, job loss, car repairs, and lending to relatives also contributed to high level of stress. Healthcare costs contributed to high levels of stress as well. More than 50% of the respondents said they had used their credit cards to supplement medical expenses. Of those who reported using their card for this purpose, the average debt was $2,194. Not surprising is that age 65 and over were carrying the highest amount.
Americans have found several ways to pay down credit card debt. The highest percentage, 59%, say they used their tax refund; 45% have worked extra hours or have gotten a second job; and 34% have used their savings. Other means of paying down debt have ranged from cashing in on retirement funds to drawing from home equity lines. A sad 8% have even said they have given up going to school to cut expenses. The report confirms that American families have faced the greatest financial burdens in decades.