Report: Many American adults use credit cards to survive financially

Reports show that American credit card debt is increasing, and a significant proportion of middle-aged adults now rely on their credit cards to survive.

Limiting credit card spending to manageable levels is an ongoing challenge for many people in Orlando. Despite the stereotypical view of people using credit cards to make frivolous purchases, reports indicate that many adults now rely on their cards for more essential expenses. According to USA Today, one new study shows that a large proportion of adults between ages 35 and 67 depend on their credit cards for financial survival.

Financial ‘lifelines’

During this study, 1,000 Baby Boomers and 1,000 members of Generation X were surveyed. The study found that about one-third of Baby Boomers carry credit card balances over each month, and about one-quarter worry about their financial standing. Members of Generation X report experiencing even greater financial stress, as the following figures reveal:

• Each month, 46 percent of these adults cannot pay off their credit card balances.
• To 23 percent of these consumers, saving for retirement is a secondary concern after managing existing debt.
• For 20 percent of these adults, accruing debt to make basic purchases is a regular habit.

Troublingly, over 48 percent of the people who were surveyed stated that they use their credit cards as “lifelines” to handle necessary expenses. This finding may not be representative of American consumers as a whole, since the survey sample size was relatively small. Still, this result could help explain why credit card debt is again on the rise throughout America.

Debt buildup

According to CBS News, credit card debt levels that fell during and immediately after the Great Recession are starting to grow again. In 2014, net credit card debt across the U.S. rose by a staggering $57.1 billion, according to a CardHub report. Further increases are expected in 2015.

The average level of household credit card debt is inching toward the level that it reached before the recession. Then, each household held $8,300 of this debt. As of March, the average household had accumulated $7,200 of credit card debt. Experts worry that, if this debt keeps rising, many households may be overwhelmed by their liabilities.

Other research supports this concern. According to CBS, Pew has found that over half of Americans feel financially insecure. A similar number of Americans report that they do not have the resources to handle a financial emergency. Together, these findings suggest that many consumers may be at risk for accruing obligations that they cannot handle.

Seeking relief

For some people who can no longer keep up with credit card debt, filing bankruptcy may be a worthwhile option to consider. Qualifying consumers who file Chapter 7 bankruptcy may be eligible for credit card debt discharge. Alternately, filing Chapter 13 bankruptcy can give consumers an opportunity to consolidate and gradually repay credit card debt and other approved debts.

Before committing to either chapter or formally filing bankruptcy, people who are overwhelmed with credit card debt may benefit from seeking legal advice. A bankruptcy attorney may be able to explain a person’s options and offer any needed assistance during the filing process.

Keywords: bankruptcy, credit card, retirement