Survey: Affluent Americans Carry High Credit Card Balances

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When they think of people who carry high credit card balances, many people envision lower income individuals and families living paycheck to paycheck who need to use cards to pay for everyday expenses like groceries, gas and utilities.

But a new survey conducted by Bankrate Credit Cards found that this isn’t necessarily the case. According to the survey, Americans with a net worth of $100,000 or more are the most likely to carry credit card debt. More than half (58%) of these individuals owe at least $2,500 on credit cards and four out of 10 (39%) have at least $5,000 in credit card debt.

More Surprising Results

What might be most surprising about the survey results is that those in the lowest income bracket (earning $40,000 a year or less) have the least amount of credit card debt. The most credit card debt is held by those with net a worth of between $100,000 and $199,999, who hold 57% of all credit card debt in the U.S.

So what’s the most common reason why those with credit card debt use their cards? According to the survey, it’s to pay for everyday expenses (28%). This was followed by making retail purchases (16%), paying for car repairs or maintenance (11%), paying medical bills (also 11%) and going on vacation (9%).

The use of credit cards to pay for everyday expenses isn’t much lower among the wealthy than it is among all Americans. One out of every five people (21%) earning between $100,000 and $199,999 use credit cards for this purpose, according to the survey. 

Keeping Up with the Joneses

These statistics beg the question: Why are so many relatively affluent people racking up so much credit card debt — especially debt to pay for everyday expenses? One possible reason is what’s sometimes referred to as “lifestyle creep.”

As their income increases, some people increase their lifestyle proportionally — or sometimes, disproportionately — in an effort to “keep up with the Joneses.” What they once viewed as luxuries — like a big home, fancy cars or expensive vacations — become necessities. Before they know it, their monthly expenses exceed their income and they have to use credit cards just to pay their regular bills.

Another possible explanation is the easy access to credit that many wealthy people have. Mailboxes are stuffed with credit card offers that are often based on an individual’s or family’s income, not their debt-to-worth ratio. However, just because a credit card offer arrives in the mail doesn’t mean it’s a good idea to accept it.

Reducing Credit Card Debt

If you have accumulated more credit card debt than you originally intended, there are some things you can do to get out from underneath it. Bankrate.com recommends the following steps:

  1. Track your spending. Review the past three months’ credit card statements and categorize your purchases. This will help you identify areas where you might be overspending so you can make a conscious effort to cut back.
  2. Create separate accounts for spending needs. Create three spending accounts: checking, emergency savings and planned spending. This will help you plan for unexpected expenses like major car or home repairs or medical bills.
  3. Consider a balance transfer card. This is an effective way to pay off all credit card debt within an introductory zero percent APR window. Make sure you can afford to make the monthly payments based on the introductory period length — and then don’t make any more purchases on the card until you’ve completely paid off the debt.

Please give us a call if you have more questions about reducing credit card debt.


The commentary is limited to the dissemination of general information pertaining to Frontier Wealth Management, LLC's ("Frontier") investment advisory services. This information should not be used or construed as an offer to sell, a solicitation of an offer to buy or a recommendation for any security, market sector or investment strategy. There is no guarantee that the information supplied is accurate or complete. Frontier is not responsible for any errors or omissions, and provides no warranties with regards to the results obtained from the use of the information. Nothing in this document is intended to provide any legal, accounting or tax advice and Frontier does not provide such advice. This information is subject to change without notice and should not be construed as a recommendation or investment advice. You should consult an attorney, accountant or tax professional regarding your specific legal or tax situation.

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