Many Americans mismanage their credit cards that can result in stress, a new study revealed.
Commissioned by Clever Real Estate and carried out by Pollfish, an online polling software, the authors of the paper analyzed 1,000 survey responses of Americans who held at least one credit card.
Almost half of the respondents (47%) obtained some amount of credit card debt from month to month. Also, the survey found that 72% of borrowers are carrying more than $1,000.
The survey also found that debt from credit cards is the most stressful debt for Americans. It ranks higher than student loans, home loans, and auto loans.
Tommy O’Shaughnessy, an analyst at Clever Real Estate Analyst and the report’s author, said that often lower-income families bear the brunt of debt. He added that with the average 17.64% APR, the debt can compound quickly and can become unmanageable for these households.
Nearly 38% of respondents said that credit card debt had prevented them from making a significant life purchase — which may include things like a house or a vehicle.
O’Shaughnessy said that the group carried out the study because credit building has a substantive impact on the home buying process. The company also wanted to find out if credit card debt would affect essential life purchases like homes.
The poll also showed that millennials could be the most financially responsible cohort when it comes to credit card usage but still need to learn more. Only 50% of this generation know that interest rates on credit cards are higher than those of mortgage.
According to the study, the primary reason people applied for a credit card was to have options in case of a financial emergency. A Federal Reserve report found that 44% of all Americans could not cover their needs during a crisis, which led to an out-of-pocket expense.