Buried in Credit Card Debt? Don’t Feel Stupid

Every year, Debt.com polls Americans about their credit cards. Every year, their balances grow.

But every year, they also prove something important: They know a lot more about how credit cards work than many folks think.

Many people believe – incorrectly – that if you have debt, you must be dumb. In fact, many of the people we’ve helped feel the same way. I can’t tell you how many of our credit counselors tell me that first-time callers are embarrassed by their financial struggles. Some of these new clients call themselves “dumb.” That’s just not true.

Instead, our annual survey shows Americans know exactly how the system works. The problem is simply that the system is stacked against them. Let me explain.

Debt-smart

We always ask respondents if they know their own credit score. This year, 85% did. That’s consistent with past years. And it’s impressive.

After all, surveys routinely show many Americans struggle with basic civic knowledge. One study found that 75% of young Americans couldn’t locate Indonesia on a map. Only 64% can name all three branches of our government. (That’s executive, legislative, and judicial. How’d you do?)

Those same respondents have also considered all sorts of ways to deal with their surging debts. Those range from DIY solutions like a balance transfer to hiring experts to guide them through debt settlement. Less than half (46%) hadn’t considered any of these options.

These credit card holders also know about President Trump’s idea to mandate a 10% federal cap on credit card interest rates – and their opinions were split. Rounding up:

• It’s realistic and enforceable – 36%
• It’s possible, but unlikely – 26%
• It’s not realistic or enforceable  – 24%

Only 15% replied, “I’m not familiar enough with the proposal to say.”

Cash-poor

Sadly, our respondents were also split on whether such a cap would help them. Only 35% said it would “significantly” reduce their debt, while 27% said it would have “little to no impact on me.”

While we didn’t have time to drill down further, I can make an educated guess about the middling enthusiasm for such a cap. Namely, America’s credit card debt is such a serious problem, a temporary 10% cap on interest rates isn’t a game-changer.

That’s because many Americans are using their credit cards to simply bridge the gap between paychecks. More than half (55%) told us price increases have forced them to use their credit cards “to make ends meet.”

We also asked them. “Have you maxed out your credit cards in recent years while inflation and interest rates have increased?” More than 4 in 10 (46%) said yes. That’s troubling. If you need your cards to just survive, what happens when you have no credit left?

This shows me, and hopefully others, that credit card debt isn’t a personal weakness. It’s a systemic problem.

Many of today’s cardholders have endured a recession, pandemic, inflation, AI job upheaval, skyrocketing rents and housing prices, college tuition rising faster than inflation, and a host of other financial headwinds.

That’s why Debt.com exists. If credit card debt didn’t exist, we wouldn’t, either – much like the world wouldn’t need doctors if everyone was healthy all the time. Sadly, credit card debt isn’t going away soon. So neither are we.