1 in 4 Americans Can't Afford to Pay Their Credit Card Bills: Survey
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Nearly 25 percent of all Americans are facing unsecured debt that they say is "unmanageable," according to new data released from Experian.
The rise in debt after the pandemic has caused many Americans to take on additional jobs and use budget apps amid high inflation, the new survey revealed. Newsweek spoke to several experts on the matter.
Why It Matters
Consumers in the United States owed $17.57 trillion in total debt as of the third quarter (Q3) of 2024, according to Experian data.
As the U.S. Department of Education will once again begin reporting missed student loan payments to credit bureaus on May 5, Americans could face even more financial consequences in the coming months to their loan balances.
During the COVID-19 pandemic, federal student loan payments were paused, and interest was set at 0 percent. When the pause officially ended last year, the government introduced a temporary "on-ramp" to prevent immediate financial fallout.
A sticker shows that the American Express credit card is accepted at the front of a business on February 11, 2025, in Chicago, Illinois.
A sticker shows that the American Express credit card is accepted at the front of a business on February 11, 2025, in Chicago, Illinois.What To Know
The new Experian data revealed 23 percent of U.S. adults say they currently have unsecured debt that is "unmanageable."
This is causing many to take on another job or side hustle (36 percent) or use budgeting apps (23 percent).
Debt can grow for a variety of reasons. While it may be logical to take on a loan or use a credit card for big purchases like homes or cars, 41 percent of U.S. adults said their biggest misconception about debt before they had to manage it was that minimum payments were enough.
However, for those who only pay the minimum amount, the level of debt can skyrocket due to high interest rates.
Rod Griffin, senior director of public education and advocacy for Experian, said that much of the "unmanageable" debt consumers face is due to these credit card expenses.
"People are becoming reliant on credit cards for everyday purchases and often lack a plan for how they're going to repay them or a plan for how they are going to use credit cards so that they don't get into trouble," Griffin told Newsweek.
But student, car and home loans also take a toll.
As the Biden administration made student loan forgiveness a pillar of its Department of Education, nearly 4 million borrowers collectively saw at least $140 billion in student loan debt canceled in 2024, according to Experian.
This led to overall lower debt levels, but as President Donald Trump's new Education Department has restricted those options, the level of debt could see a significant uptick.
What People Are Saying
Rod Griffin, senior director of public education and advocacy for Experian, told Newsweek: "The pendulum is starting to move a bit toward people having more issues with repaying the debt. For quite a while, we saw the level of credit card debt increased but the ability of people to make those payments seemed to be very strong. We didn't see increasing delinquencies, didn't see people having significant difficulty. We're starting to see people have a bit more now."
Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, told Newsweek: "In the years during and following the pandemic, unsecured debt - debt accrued through financial products like credit cards and consumer loans - skyrocketed as millions of Americans needed the support of these debt types to finance their lives as inflation took its toll. After leaning on this credit the past few years, the bills are piling up, and monthly payments that were once smaller and more manageable are no longer as easy to tackle."
Kevin Thompson, the CEO of 9i Capital Group and the host of the 9innings podcast, told Newsweek: "Unmanageable debt is hitting hardest among Gen Y and Gen Z. These younger cohorts are dealing with student loan balances that seem to never go down. There are countless stories of people making payments for years, only to watch their balances increase over time. That becomes an unimaginable situation, especially when you're also trying to cover basics like transportation, health insurance, and rent."
What Happens Next
Griffin said moving forward, it's likely younger generations will continue to have lower credit scores and less debt that increases over time when they enter a different stage of life.
While millennials were reluctant to use credit cards when they came of age, their changing life priorities are forcing higher amounts of debt now.
"Millennials as they grew older and entered into relationships, were growing their careers, starting to have families, buying homes, all of those things then involve more credit use, just by nature of you buy a house you tend to need to have credit established," Griffin said.
Escalating debt could have a more significant impact on low-income households, but the middle class is also facing challenges, Beene said.
"It's a worrying sign, as this debt typically carries higher interest rates and can easily become more unmanageable more quickly, and it's not just affecting lower income households," Beene said. "Middle class households are also increasingly having issues with keeping these debt forms under control."
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