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45 Percent of Americans are Making Minimum or no Payments on Their Credit Card Balances

Monday 7 March 2005 18:39 CET | News

Nearly half of Americans (45%) are making only minimum or no payments on their credit card balances, according the Cambridge Consumer Credit Index.

Of the respondents surveyed 37% paid less than half but more than minimum payments, (down by 2% from 2004, but unchanged from 2002 levels). Those paying more than half the balances increased by 4% from 2002 levels. The survey also asked respondents their reasons for taking on debt, 53% (down by 3 points from 2003 levels) said they did so because they are confident of their abilities to repay it. Conversely 47% (up by 3 points from 2003 levels) are taking on additional debt because they do not have the money to pay for it. Overall 39% of Americans will pay of their balances in full (up from 2002 by 2 points, but unchanged from 2004), 28% plan to extend their payments (down by 4 points from 2002). Conversely 33% did not use credit cards, up by 3 points from 2002 levels. The results of the Cambridge Consumer Index wildcard question show that the disparity between the haves and have-nots is increasing. The survey shows those who have the means to pay off their credit cards is increasing and are better able to manage their spending habits, while the numbers of those unable to make or make only minimum payments is also on the rise. Increasing cost of living and gas prices and unforeseen emergencies have contributed to lower income brackets incurring additional debt out of necessity and unable to make even the minimum of payments. Interestingly although recent economic data shows strength and resilience that the economic climate is improving there remains significant variance on the local and regional levels, says Jordan Goodman, spokesperson/financial analyst for the Cambridge Consumer Credit Index. In March, 28% of Americans say they have taken on more debt, with 21% taking on a little and 7% taking on a lot more debt. Conversely, 72% of Americans have paid off debt, with 55% paying off a little and 17% paying off a lot. In March, 19% plan to take on more debt, with 4% planning to take on a lot and 14% planning to take on a little debt. Conversely, 81% plan to pay off debt, with 63% paying off a little and 19% paying off a lot. In February, 19% planned to take on debt and 81% planned to pay off debt. In March, 41% of Americans plan to take on more debt to make such purchases, with 12% taking on a lot of debt and 29% taking on a little more debt. In contrast, 59% of Americans plan to pay off debt in the next six months, with 43% expecting to pay off a little and 16% expecting to pay off a lot. In February, 35% of Americans planned to take on more debt, while 65% planned to pay off debt. The results of the Cambridge Consumer Credit Index show that consumers are creatures of habit and are continuing their spending habits seen in the last few years, despite signs of slowing down in both the housing and auto sectors. Overall the index is at the same levels seen throughout the past couple of years, but the biggest surge is seen in the future intentions question, 7 points higher than the average, indicating consumer optimism about their future, says Jordan Goodman, spokesperson/financial analyst for the index. The Index survey is conducted by ICR (International Communications Research) of Media, Pennsylvania over five days in the week before the Index is released. Over 800 households are polled based on random-digit dialing, with all demographic and regional groups in America fairly represented. The Index has a margin of error of plus or minus three and a half percentage points.


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Categories: Payments & Commerce | Payments General
Countries: World
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Payments & Commerce