In 2017, folks in Massachusetts and throughout the country added $92.2 billion in credit card debt, which was the most since 2007. That pushed the overall credit card debt in the United States to over $1 trillion, according to the Federal Reserve. In the final quarter of 2017, the average American household owed $8,600, which was up 6 percent from the same time period in 2016.
Many Massachusetts residents are struggling to make their credit card payments, but a study from CreditCards.com reveals that individuals and families in other parts of the country have even more serious revolving debt problems. The consumer financial advice website looked at how much the residents of America's 25 most populous cities and regions owed to credit card companies and how long a worker earning average wages would take to pay this debt off, and Boston ranked sixteenth with an average balance of $6,455.
Rising interest rates and growing credit card debt balances may create financial issues for Massachusetts residents and others in the future. While increasing debt levels are generally seen during good economic times, it is possible to have too much debt. Now may be the best time for a person to take a strong look at his or her overall financial situation.
Residents of Massachusetts who have higher credit card debt than they did a year ago might take some comfort in knowing that they are not alone. Americans have more credit card debt now than they did a year ago, according to an Experian annual study, and the Federal Reserve reports that in 2017, the country reached a record high of more than $1 trillion in credit card debt. But the good news is that credit scores are up, too, which suggests that Americans are doing a pretty good job of handling their debts.
Massachusetts residents may be pleased to hear that the average credit score in America has increased in the past year to 675. That is the highest it has been since 2007. While many assume that millennials struggle with credit, they do not have the lowest average credit score when broken down by generation. That would be Generation Z with an average score of 634.
Credit cards are being utilized by consumers in Massachusetts and other states now more than ever. According to a report from Consumer Financial Protection Bureau, credit card accounts and the average amount of credit card debt among consumers have increased over the last two years. The number of credit cards paid late or not at all has also increased.
For many Massachusetts residents, owning their own home is an important part of achieving the American Dream. However, a recent study from the consumer finance company NerdWallet suggests that house, apartment and condominium buyers run up far higher credit card bills than those who rent their homes. While homeowners are usually able to deduct mortgage interest and certain other expenses on their income tax returns, they also pay almost twice as much each year in revolving debt interest, according to the study.
Many people living in Massachusetts carry heavy debt loads. Unfortunately, while most of these individuals would like to reduce or eliminate their debts, they make self-defeating mistakes that can make debt management difficult, if not impossible. Financial education, combined with better spending habits, can often provide relief.
According to a survey of more than 2,000 adults, nearly 50 percent of Americans carry a credit card balance for two or more years. In some cases, Americans have been holding onto credit card balances for more than five years. This can have an impact on the finances of Massachusetts residents who carry such balances. Those who are 63 and older are the most likely to carry such debt.
The Federal Reserve says that Americans collectively hold more than $1 trillion in credit card debt. Each household has $8,377 in credit card debt. While some may advise debtors to not pay their bills, it may be better to acknowledge the issue and make a plan to resolve it instead of ignoring the debt. Massachusetts residents who may think that they will miss a payment should reach out to their creditors immediately.