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Why Americans have more credit card debt

Valencia Higuera, on

Published in Home and Consumer News

–– Striving to promote an image: Some image-conscious people are too concerned with how they come across to others, and they attempt to fit into a particular social class at the expense of their personal finances. Rather than live within their means, they use credit cards to finance a more exciting lifestyle.

"From what I've noticed, people are purchasing more luxury items with their credit cards (when they can't afford to) because it promotes a desirable image," Pehrson said.

The occasional splurge is OK, but spending more than you earn on a regular basis could leave you broke. So rather than overspend to keep up with the pack, change your mindset. The desire to maintain a certain image might do more harm than good in the long run. You could end up with out-of-control debt, a lower credit score and less money in the bank.

–– Suddenly losing a job: "Most people assume that credit card debt comes from living beyond your means, taking lavish trips and buying unneeded items," said Sarah Hollenbeck, a personal finance and credit card expert at Credit Cards by, a website helping consumers find the best credit cards. "But, if you're unemployed for a while and living off your cards, debt can come from mundane things like groceries, gas and utility bills."

In a perfect world, everyone would have six to 12 months of income tucked away for a rainy day. Because saving a large amount of money is challenging at some income levels, the slightest change in income or employment could trigger higher debt -- hence the importance of building a cash reserve.

–– Insufficient emergency savings: While on the topic of cash reserves, the lack of an emergency fund can also contribute to higher credit card debt. According to a 2017 GOBankingRates survey, 57 percent of Americans have less than $1,000 in a savings account.


Because you can't predict a job loss or any other unexpected event for that matter -- a car repair, home repair or emergency travel -- take extra measures to ensure that you're prepared for the unexpected. The more cash in the bank, the less you'll need to rely on credit to keep your head above water.

Commit to saving money every week, even if it's only $25. To drum up additional cash, reduce how much you spend on monthly subscriptions, entertainment and shopping, and then gradually increase your contributions to savings.

–– More access to credit cards: Another reason for higher credit card debt is that more people have access to lines of credit. And with more people swiping their credit cards, the average amount of debt per household rises.

"Major banks and credit card companies have become more lenient throughout the years when it comes to who is approved for a credit card," Hollenbeck said. "Since some of the newly approved consumers are those with lower credit scores, the national debt continues to rise as more and more cardholders accumulate debt with higher interest rates."


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