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Yahoo
3 days ago
- Business
- Yahoo
Recent surveys confirm: How you feel about debt depends on your income, credit
It's well-documented that we live in a world of severe income inequality and have made little progress in closing the racial wealth gap. There's a related and similarly unjust fact of our present times: Your income and credit determine how easy (or difficult) it is to climb out of debt. Just look at research published in April from two national lenders. Santander reported more than three-quarters of middle-income Americans 'believe they are on the right financial track,' staying 'current on their bills.' Achieve noted that less than a quarter (19 percent) of its survey respondents who have sub-620 credit scores feel their debt is manageable. No wonder. The lower your income and credit, the fewer (good) options you have to get out of a funk. This isn't exactly breaking news, but it seems to be getting worse. Consider that more than one in 10 credit card holders (11 percent) made only the minimum payment toward their outstanding balance in the fourth quarter of 2024, an unfortunate high since the Federal Reserve Bank of Philadelphia began tracking this data point 12 years ago. Lower-income earners don't have a monopoly on amassing credit card debt. But higher-income-and-credit individuals and families have more time to plan their way out of it. The Santander survey showed that of the 53 percent of middle-income respondents who were considering taking out a personal loan, large majorities said they were tracking interest rates; would be more likely to apply for a debt consolidation loan if rates come down; and plan to take out such a loan in the next 12 months. Anyone who has significant debt and less income knows that waiting around, perhaps for lower rates, isn't a realistic option. Many consumers need solutions right now. After all, consumer debt is at an all-time high, particularly so for the subprime segment highlighted in the Achieve survey. About 61 percent of respondents who self-reported having excellent credit (scores above 760) said their debt is 'manageable.' Those who estimated having poor credit (below 620), only 19 percent said the same. Other recent research is more optimistic. Experian published an April survey highlighting strategies used by consumers who paid off what they'd previously considered to be 'unmanageable' debt: Working a second job or side hustle (36 percent) Employing the snowball debt repayment method (26 percent) Using a budgeting app (23 percent) 'I am encouraged by the number of consumers who said that they have paid off their unmanageable debt,' Rod Griffin, senior director of public education and advocacy at Experian, tells Bankrate. 'There is a lot of uncertainty right now, and it's easy to focus on the negatives, but consumers are still taking steps to reach their financial goals.' Call me pessimistic, but the rosier Experian survey leaves out mention of their respondents' credit scores (Experian is a credit bureau after all). Still, it found that nearly a quarter of respondents (23 percent) reported a 'Cinderella story' of fixing their personal finances. Also, 45 percent said paying off debt improved their lives. So, a happy ending is possible, even if your story's arc is highly dependent on where you stand today. If you have good credit, for instance, you might jump right into shopping around for a debt consolidation loan. Paying off debt with low income or credit, on the other hand, might feel like climbing a mountain barefoot. When people are overwhelmed and about to miss bill payments, they often don't know what steps to take — but the right strategy in that moment can make a major difference. We want consumers to know they're not alone, and that help is available. Consider these steps to get started: If you might miss a forthcoming payment — or perhaps you're already delinquent — start the conversation with your lender. Explain your circumstances and learn about potential options. Personal loan lender Discover, for example, allows some struggling customers to temporarily decrease their monthly dues, extend their repayment term or remove a delinquency status by making three straight on-time payments. As TransUnion Senior Vice President of Consumer Lending Joshua Turnbull tells Bankrate, 'It is in everybody's best interest that you have that awkward conversation with the lender. And I think people are often surprised how willing lenders are to work with borrowers to find a way to keep that from becoming a fraught situation.' Going it alone is harder. So, besides calling on your lender or loan servicer, you might consult a nonprofit credit counseling agency representative who could recommend a debt management plan or a debt lawyer who'd suggest debt settlement, to name a couple of common examples. Related: How to get debt relief It might feel like it's too late to start tracking your spending, but setting up a budget will help you organize your debt accounts and prioritize them alongside other drains on your earnings. Related: Which debt should you pay off first? Like the Experian survey respondents who leveraged the debt snowball method (or paying off your lowest balance before 'snowballing' your motivation to pay down higher balances), you have a good or least-bad repayment option out there somewhere. You just have to find it. Using a personal loan to pay off credit card debt, for example, might be a good first step if you want a single monthly payment and have a cosigner or co-borrower who can help you qualify for a lower rate. Related: Effective strategies and tips for repaying debt The snowball method might be best for you if you need an occasional pick-me-up during repayment. But no matter which route you choose toward a zero balance, motivate yourself and stay engaged. Some borrowers have found success with rewarding themselves each time they hit a payoff milestone, for example. Whatever works for you, stick to it. Related: How to set up a debt payoff plan and stick to it
Newsweek
06-05-2025
- Business
- Newsweek
Gen X, Millennials Report the Most Crushing Debt
Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources. Newsweek AI is in beta. Translations may contain inaccuracies—please refer to the original content. While Gen Z may have a reputation for being more financially troubled, new data reveals that Gen X and millennials are far more likely to carry unmanageable debt. These age groups were in some cases nearly twice as likely to report debt they can't afford to pay off as baby boomers and significantly higher than Gen Zers as well, according to new data from Experian. Why It Matters Gen X—born between 1965 and 1980—has often been characterized as the sandwich generation, nestled between baby boomers and millennials. Gen X has avoided some of the economic uncertainty that millennials and Gen Z may have faced in their childhood and early adulthood, but they often find themselves taking on unmanageable debt. Because many Gen Xers have elderly parents and children attending college, many find themselves with debt they feel unable to pay off. Gen X and millennials are far more likely to carry unmanageable debt than other generations, according to new data from Experian. Gen X and millennials are far more likely to carry unmanageable debt than other generations, according to new data from To Know New data from Experian revealed that Gen X and millennials were far more likely to have unmanageable debt than other generations. While 27 percent of Gen X respondents said they have unsecured debt that is unmanageable, only 18 percent of Gen Z and 15 percent of baby boomers said the same. Only millennials came in higher, with 28 percent saying they had unsecured debt that is unmanageable. When broken down by gender, men had a slight edge on women, with only one in five reporting unmanageable debt, compared to one in four women. Across the board, 25 percent of all Americans are facing unsecured debt that they say is "unmanageable," the survey found. Consumers in the United States owed $17.57 trillion in total debt as of the third quarter of 2024, according to Experian. An H&R Block 2024 Outlook on American Life Report found that while Gen X had the most credit card debt of the generations, Gen Z felt more "burdened" by it. What People Are Saying Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, told Newsweek: "It's no surprise we see rising rates of unmanageable unsecured debt among millennials and Gen X. Both of these generations are reaching a point in their professional careers where their earning power is increasing and, depending on age, peaking. However, with those higher wages tend to come a higher standard of living, and with costs continually increasing, Gen X are leaning more on debt to finance maintaining their lifestyles." 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." Kevin Thompson, the CEO of 9i Capital Group and the host of the 9innings podcast, told Newsweek: "They're [Gen X] not crushed by student loans like millennials or Gen Z, and many are hitting their stride in their 40s and 50s, earning more than ever. But here's the truth: Some are hustling hard to make up for lost time on retirement savings, while others have basically thrown in the towel, resigned to the idea that they'll be working forever. This generation is walking a tightrope between opportunity and burnout. Some are catching up while others are trying to hang on." Michael Ryan, a finance expert and the founder of told Newsweek: "Gen X isn't failing at money management; they're failing at time travel, trying to fund three generations' lives with one generation's income. And the cruelist irony? They'll finally pay off their kids' student loans just in time to move into their children's spare bedrooms." Drew Powers, the founder of Illinois-based Powers Financial Group, told Newsweek: "Gen Xers are increasingly finding themselves juggling a child's college tuition, their own mortgage, in addition to the hard and soft-dollar expenses associated with caring for their baby boomer parents. Even if you are not paying your parents' bills, you may be taking time away from work to drive them to doctor's appointments or the grocery store. Whether it's cash out of pocket or time away from work, it all adds up to financial strain." What Happens Next Along with the COVID-19 pandemic, rising inflation and interest rates, Gen X and millennials have felt the hit to their wallets and subsequently their credit. "Wages never keep up with inflation in the short term, so many Gen Xers have had to turn to using more and more credit to pay for everyday expenses," Powers said. As the sandwich generation, Gen X is likely to face more hurdles moving forward as their parents become older and their children's student loans pile up. "They're caught in a financial storm," Ryan said. "Paying for college they can't afford for kids who can't find jobs, while supporting parents who outlived their savings."
Newsweek
23-04-2025
- Business
- Newsweek
1 in 4 Americans Can't Afford to Pay Their Credit Card Bills: Survey
Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources. Newsweek AI is in beta. Translations may contain inaccuracies—please refer to the original content. 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, 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."
