45% of Americans Are Making Minimum or No Payments on Their Credit Card Balances, According to the Cambridge Consumer Credit Index
Almost half of Americans (45%) are making only minimum or no payments on their outstanding credit card balances, up from 42% who did so in 2004, according to the Cambridge Consumer Credit Index. Of the respondents surveyed, 37% paid less than half but more than minimum payments (down from 39% in 2004). 17% of Americans paid more than half the balances due, down from 19% last year.
Islandia, NY (PRWEB) March 7, 2005 -- The survey also asked respondents their reasons for taking on debt. 53% (up from 51% in 2004) said they did so because they are confident of their ability to repay. Conversely, 47% (down from 49% a year ago) are taking on additional debt because they do not have the money to pay for their necessary expenses.
Overall, 39% of Americans have continued to pay off their balances in full (unchanged from 2004), 28% extended their payments (down from 32% a year ago). 33% did not use credit cards at all, up from 29% in 2004.
The results of the Cambridge Consumer Index wildcard question show that the disparity between the credit haves" and have-nots" is widening. The survey shows that the number of Americans not using credit cards at all has risen from 26% in 2003 to 33% today. Also, 53% of Americans using credit are doing so because they are confident they can pay off the debt, up from 51% a year ago. On the other hand, those Americans in financial distress seem to be falling further behind, with 45% making the minimum or no payment on their credit card balances, up from 42% last year. Notably, 5% of Americans didnt have the money to make any payment on their credit card balances, up from 3% last year, " reported Jordan Goodman, spokesperson and financial analyst for the Cambridge Consumer Credit Index.
For a detailed year-to-year account from 2003 to 2005, please refer to the table below:
When you received your credit card bills this month, did you pay off the balance in full or are you extending payments past this month?
2003 2002 2005 2004
Pay off balance in full 39% 39% 43% 37%
Extended payments 28% 32% 31% 32%
Did not use credit cards 33% 29% 26% 30%
Of those who plan to extend payments, what proportion of the payments you are making? 2004 2003 2002 2005
Pay off more than half the balance 17% 19% 17% 13%
Pay less than half but more than minimum 37% 39% 37% 37%
Pay minimum or slightly more 40% 39% 40% 47%
Did not make any payments at all 5% 3% 6% 3%
Which of the following statements best describes why you are taking on this debt? 2005 2004 2003
Taking on debt because
I am confident about paying it off 53% 51% 56%
Taking on debt because
I do not have the money to pay 47% 49% 44%
Source: Cambridge Consumer Credit Index
These findings are the result of monthly nationwide telephone polls of more than 800 adults, conducted by ICR/International Communications Research The most recent survey was made last week, and was sponsored by the Debt Relief Clearinghouse.
The overall Cambridge Consumer Credit Index rose by one point in March to 59. The Index fell sharply on the last month" question, remained unchanged in the present month" question, and rose sharply in the next six months" question. The Reality Gap," which is the difference between the amount of debt consumers say they will pay off in the next month versus the amount of debt they actually paid off a month later, fell by 8 points from February to 9 points. A month ago, 81% of Americans planned to pay off debt, while a month later only 72% actually did so.
The Cambridge Consumer Credit Index is a forward looking economic indicator gauging consumer spending and debt. It is released on the fifth business day of every month to coincide with the Federal Reserve Board's G19 release of consumer credit outstanding data.
According to Chris Viale, acting President of Cambridge Credit Counseling Corp., It is alarming that 45% of consumers are only making minimum or no payments on their outstanding credit card debts. These people are most likely to pay substantially more in interest than those who can afford to make more than their minimum payments. We recommend that consumers pay down their debt as much as they can afford. Consumers can visit our free educational website, GoodPayer.com, to get information that can help them avoid the pitfalls of high credit card debt and achieve financial wellness!" In conjunction with the Index, Cambridge Credit Counseling Corp. is releasing its monthly survey of people who have called in for credit counseling services over the past month. Cambridge representatives ask callers for the primary reason they found it necessary to get help with their debts. From the 180 people who answered, these responses were gathered:
1. My income has been reduced from a lower salary, less overtime or layoff (31.7%)
2. I am frustrated with high bank rates and fees (27.2%)
3. I want to improve my ability to achieve future financial goals like buying a house or saving for retirement (15.0%)
4. I got into too much debt by overspending (6.1%)
5. Other (8.3%)
6. Recently divorced or widowed (2.2%)
7. Large medical expenses forced me to take on huge debts (3.9%)
8. My lack of financial education caused me to take on too much debt (5.6%)
These findings are the result of monthly nationwide telephone poll of 800+ adults conducted by ICR/International Communications Research in the past week, sponsored by the Debt Relief Clearinghouse. The Cambridge Consumer Credit Index is a forward looking economic indicator gauging consumer spending and debt. It is released on the fifth business day of every month to coincide with the Federal Reserve Board's G19 release of consumer credit outstanding data.
For more information on the survey see http://www.cambridgeconsumerindex.com/index.asp?content=client_survey
Contact Paramjit Mahli at mailto:pmahli@cambridgeconsumerindex.com or 631-786-6450 http://www.cambridgeconsumerindex.com/.
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