According to LendingTree, nearly half of Americans have credit card debt, and most claim it’s out of their control, with younger generations even more blaming their parents for credit card debt.
How are parents scapegoats for young people’s credit card debt?
Economic factor
The survey found that while 47 percent of Americans have credit card debt, 60 percent of them believe it’s due to factors beyond their control and, therefore, it’s not their fault.
Matt Schulz, chief credit analyst at LendingTree, said people are blaming the economy, the coronavirus pandemic and the federal government for their credit card problems.
“Economic factors, particularly stubborn inflation, have clearly played a role in credit card debt by making it harder for Americans to pay their bills, leaving many in debt and deepening the debt ‘black hole’ for others.” Schultz said those who blame the outbreak cite the fact that its effects continue to affect their finances, especially those who still face medical problems.
Breaking down personal factors, 31 percent of respondents attributed debt to a lack of financial management, 25 percent to a medical emergency, and 24 percent to a financial burden.
Educational dislocation
The survey found that 57 percent of Americans with credit card debt believe they would not be saddled with credit card debt if they had been better educated about personal finance earlier.
It’s an interesting statistic, Schultz said, but the good news is that more people are talking about personal finance these days. “But we’re also seeing more and more states incorporating personal finance content into the curriculum for high school students, so it’s important that people learn these things as early as possible.” There’s no question about that.” ‘he said.
The survey found that younger generations are particularly likely to benefit from personal finance education. Sixty-nine percent of millennials agree with this statement, as do 68 percent of Gen Z.
Nearly 32 percent of Americans with credit card debt blame their parents, saying their finances put them in debt, according to the LendingTree survey. More than half of Gen Z (52 percent) and 44 percent of millennials blame their parents for this, Schultz said. There’s no doubt that your family finances will have a real impact on you in many different ways when you start your business, but interestingly, the youngest among us are the most likely to blame our parents for credit card debt.
Reduce debt
The survey said that when parents are open about their finances, it helps dispel fears of debt and many taboos, and parents need to set good financial examples for their children.
No matter who or what is blaming their credit card debt, most people are doing it because of stress. 72% of Americans are stressed about their debt; Nearly half (49%) of respondents expect to be out of debt in a year or less. In response, Schultz said this shows that credit card debt is somewhat manageable.
However, 18 percent said it would take them more than five years to pay off their credit card debt. To help bring down debt, Schultz says the first thing people should do is keep credit card interest rates in check.
“You can transfer your existing high-interest credit card debt onto a balance transfer credit card that offers 0% interest, and then simultaneously consolidate your remaining debt (such as a personal loan) with a new low-interest personal loan.” Specifically, the goal is to reduce interest costs, thereby speeding up the rate at which debt is paid off. At the same time, it can be combined with a low-interest personal loan, or you can call the credit card issuer and ask them to offer a lower interest rate on the card. It’s more effective than people think, “Schultz said.
Another way to reduce credit card debt or stop debt “snowballing” is to spend more money and pay down debt at the same time.
Schultz says these two things have to go hand in hand, because if you pay off your credit card balance to zero and you’re not saving, then the next big unexpected expense will go straight back to your credit card and you’ll be back in debt.
If you have a little savings, that will help a lot. You can pay in cash instead of putting the charge on your credit card.
“It’s not an easy task. It may end up taking a little longer to pay off the debt, and you may even end up paying a little more to get out of debt. But in the long run, it’s worth it, “Schultz said
