Nearly Half of Americans Say They Emotionally Overspend, Survey Shows by Nerdwallet
The survey asked Americans about what they consider to be acceptable and embarrassing reasons for getting into credit card debt, the emotions that lead them to overspend and who’s responsible for solving the problem of credit card debt in the United States.
Emotions can drive debt
Consumers get into debt in different ways, but Americans have their suspicions about the No. 1 cause of credit card debt. Six in 10 Americans say the most common reason for credit card debt is people spending more than they can afford on unnecessary things. Only 10% say the most common reason for credit card debt is that people’s income won’t cover necessities.
Whatever the reason, the accumulation of credit card debt appears to be heavily influenced by emotion. Almost half of Americans (49%) say emotions cause them to spend more than they can reasonably afford, with stress, excitement and sadness being the top emotions associated with overspending.
Embarrassing vs. acceptable reasons for debt
While a large majority of Americans (86%) say there are acceptable reasons for getting into credit card debt, slightly more (87%) say they would be embarrassed if they went into credit card debt themselves.
The most acceptable reasons for going into credit card debt, according to the survey: emergency purchases (63%); medical expenses (61%); and covering necessary expenses during periods of unemployment (45%). The most embarrassing reasons: overspending on unnecessary purchases (69%); nonemergency travel expenses (43%); and cash advances (41%).
Some say consumers could use help
More than 6 in 10 Americans (63%) say individual cardholders are the only ones to blame for credit card debt, and more than two-thirds (68%) say consumers could reduce their overall spending to cut credit card debt. However, many Americans believe that outside parties could take action to help reduce credit card debt.
Almost 2 in 5 (36%) say credit card companies could stop charging interest on balances, while a third of Americans (33%) say marketers could stop promoting products and services to those with less discretionary income. A smaller but significant number (10%) say the U.S. government could bail out consumers. Unfortunately, it’s likely that we’ll have to deal with our credit card balances by ourselves.
Getting out of credit card debt is totally doable for most consumers by making a plan and sticking to it, even if it takes a long time. Steps to take to get out of debt:
- Stop using your credit card, at least until you’ve cleared your debt and you’re able to pay your balance in full every month.
- Make a list of your credit card balances with their interest rates.
- Choose a payoff plan — either going from smallest balance to largest, or going from highest interest rate to lowest. The first option, known as the snowball method, helps create momentum, but the second saves you the most money.
- Pay the minimum amount due on each card except the one you’re targeting; apply all extra money to that card. Once you have it paid off, move to the next card on the list and repeat the process.
- Find extra money to put toward your debt with a combination of increasing your income and reducing your expenses.
- Consistently pay down your balances until you’ve eradicated them.
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For more details and a complete methodology, see the full survey.
Erin El Issa is a staff writer at NerdWallet, a personal finance website. Email: email@example.com. Twitter: @Erin_El_Issa.