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Hey there, folks! Let’s chat about something that’s making money moves in America. You know those little plastic cards we call credit cards? Well, it turns out lots of folks are having a bit of trouble paying off the whole bill every month. Yep, you heard it right – more people are rolling over their credit card debt than those who pay it off completely.
The Switch: Who’s Paying, Who’s Rolling
Picture this: a brand-new survey by J.D. Power, the folks who know all about money matters, found that 51% of Americans are letting their credit card debt roll over to the next month. That means they’re not paying it all off, and they’re getting stuck with extra charges called “interest.” On the other side, there are 49% who are the smart ones – they’re called “transactors” – paying off the whole bill each month, and not letting any interest sneak in.
The Surprise Twist
Here’s the twist in the tale: this whole rolling over thing used to be less common. Back from 2018 to 2022, the number of people who rolled over their balances was around 40% to 50%. But now, the scales have tipped – there are more rollers than transactors. John Cabell, a money expert from J.D. Power, says it’s because of a few things like prices going up, savings going down, and interest rates climbing high. All of this makes it harder for folks to pay off what they owe.
Big Survey, Big Numbers
J.D. Power talked to a bunch of credit card users, a whopping 31,418 of them, from August 2022 to June 2023. So, they really got a big scoop on what’s happening with credit cards across the country.
Trouble Times: Interest Rates and Debt
Hold onto your hats because there’s more. Those interest rates on credit cards are sky-high, like they haven’t been in 40 years. And that’s not all – Americans have piled up a massive $1 trillion in credit card debt. Yeah, you heard that right, a trillion dollars! The Federal Reserve Bank of St. Louis said the total credit card balances hit $1 trillion in one week and outstanding balances hit $1.03 trillion in the second quarter.
Balancing Act: More Debt, More Trouble
Here’s another shocker: the average credit card balance in June was about $2,573. That’s 6.5% higher than last year. But wait, there’s more – the number of accounts that are behind on payments increased by a massive 42.6% in the last two years. And guess what? The average annual percentage rate on credit cards is a whopping 20.60%, the highest since 1985 when they first started keeping track.
Why the Change?
So, why are more folks letting their debt roll over? Well, it’s not always a choice. Inflation, which is when prices go up, is making things more expensive. So, some folks are having a hard time fitting everything into their budget. The survey found that 69% of those who are not in great financial shape are rolling over their debt. This group was judged based on things like how much they spend compared to how much they save, how good they are with credit, and if they have a safety net like insurance.
A Little Help
But hey, don’t worry – there’s a silver lining here. Some credit card companies have a trick up their sleeve. They’re offering something called “installment payment plans.” It’s like turning a big bill into smaller pieces. Big names like Chase, American Express, and Citi are doing this. But not too many folks know about these plans or use them. The survey said only a small number, between 9% and 23%, are using them. The people who are using them the most are the ones who are pretty good with money but still need a bit of help.
So, there you go, folks. The credit card game is changing, and it’s not all smooth sailing. More people are rolling over their balances, interest rates are high, and there’s a ton of debt out there. If you’re playing the credit card game, make sure you know the rules. Whether it’s paying off the whole bill or trying out those payment plans, it’s a whole new world out there. Until next time, keep your money savvy and those credit cards in check!
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