Surging credit card debt strains finances, undermines long-term savings

By Puja Sharma

Quicken, maker of America’s personal finance software, shared findings from a recent survey that explores the financial habits of Americans, in particular their relationship with credit cards. The disconnect between habits and intentions provides new insight into the financial struggles facing most of the population today.

In general, the study shows that Americans of all ages and financial backgrounds are amassing credit card debt, and struggling to live within their means, and these behaviors are only getting worse. Americans reportedly believe that living within your means should be a priority at all stages of life, but their growing reliance on credit cards is at odds with this sentiment.

A society dependent on credit cards

Our society is heavily dependent on credit, with three fourths (77%) of Americans reporting that they own a credit card. Half (50%) of those in America’s middle class – with an annual income between $50,000-$99,000 –  report using credit cards, rather than cash, for the bulk of their purchases. These new findings build on responses to a survey in June 2023, which discovered that two in five Americans with credit cards report being more dependent on their credit cards than ever before.

Americans are wary of credit cards
Two-thirds (66%) agree that having too many credit cards can lead to overspending. The majority of Americans also said owning more than a couple of credit cards can be stressful, especially for Millennials (71%), Gen X (69%), and Gen Z (68%), compared to 52% of Boomers.

A complicated relationship with credit card balances
Most Americans (81%) believe it’s important to pay off credit cards rather than carry a balance. This belief is especially strong for Americans whose income exceeds $200,000 (92%), compared to 76% of Americans making less than $100,000.

While 64% of Americans say that carrying a credit card balance is not a good idea, nearly half of Americans (45%) typically do, with a narrow margin between those in the $50,000-$99,0000 income bracket (51%) and those making $200,000+ (36%).

America is only getting deeper in debt
Even more concerning, over 52% of Gen Z and Millennial Americans say their credit card balance has been steadily growing over the past three to five years, with almost half (48%) admitting to this in America’s middle class and over a third (35%) in the highest income bracket of those making more than $200,000.

“Even with people knowing what they should and shouldn’t do with credit cards, they often make the mistakes anyway,” said Eric Dunn, CEO of Quicken. “This suggests that many consumers don’t feel they have a choice. But credit card debt is costly, so as that debt rises, it really hurts people’s financial health. This problem highlights the importance of budgeting and staying on top of your spending, no matter who you are and how much you make. That’s what Quicken products were built to do: help people better manage their budgets, their spending, and their finances in general, across all ages and incomes.”

Perhaps it shouldn’t come as a surprise that 54% of middle class Americans and 56% younger Americans (Gen Z/Millennials) said their current savings wouldn’t last over three months if they were to lose their source of income. But this issue is not limited to the middle class. Over one quarter (28%) of those making over $200,000 a year claim their savings wouldn’t last more than three months if they were to lose their source of income.