Ask consumers about their credit card debt, and chances are you’ll end up talking to the proverbial Stonewall.
This is not shocking, as Americans and personal finance have historically been a taboo topic. However, with full-blown inflation alerts and the dark clouds of a recession rolling in, U.S. credit card holders not only avoided talking about credit card debt, they didn’t even dare to look at it.
According to a new study by Upgraded Points that looks “behind the scenes” of consumers’ credit card behavior, 20% of respondents are “afraid to look at their credit card bills.” Nearly 10% more women than men said they were afraid to check their credit card bills.
Here’s more research showing that cardholders are highly anxious about their plastic debt.
· More than one in five (22%) would rather have someone read their text messages than their credit history.
· Almost a quarter (24%) would rather go to the dentist than share their credit history with a partner.
82% of Baby Boomers would rather have their credit card debt go away than their student loan debt, while 64% of Gen Z would rather have their student loan debt go away than their credit card debt.
Why are so many credit card holders reluctant to face credit card debt head-on? Remorse for overspending led to the list.
“Many U.S. credit card holders are afraid to look at their credit card bills because they know they are overusing themselves when they use their credit cards,” said Annette Harris, founder of Harris Financial Coach in Jacksonville, Florida. When they get their bills, they tend to ignore the fact that they need to pay their credit card to deal with the anxiety that comes with dealing with spending. However, the bill is still due, compounding their funding problems. “
This is not a good habit because ignoring credit card bills can lead to bigger problems.
“A big problem with avoiding credit card bills, for example, is that it affects their ability to get a home loan in the future,” Harris said. “When a mortgage lender looks at a home applicant’s past credit, they will know that the individual has not paid their credit card bill. This can, among other things, eliminate or delay their dream of buying a home.”
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This is just the tip of the iceberg. For example, a 30-day late payment could affect a consumer’s credit score by as much as 50 points.
“In addition to missing out on your new home, ignoring credit card bills and missed payments can affect your chances of finding a new job, as many companies now include credit checks as part of the background check process,” says wealth manager Matthew Grishman. Consultant for Gebhardt Group, Inc., Roseville, CA. “The financial impact of ignoring credit card statements is enormous.”
go to a dark place
Even seasoned financial professionals can understand the fear and pain of high credit card bills.
“In my 27 years in the business, I’ve had one accident after another in my relationship with money,” Grishman said. “Even if I have enough money to pay the bills, I end up ignoring my credit card bills.”
The good news is that, as the Upgrade Points article shows, overspending people are not alone in expressing their fear of credit card debt. “A lot of Americans are in this boat in that regard,” Grishman said.
There are no quick fixes to changing the “debt fear” equation, but transparency can help.
“What helped me start changing was talking about it openly with other people, rather than keeping my secrets in my head,” Grishman said. “We’re just as morbid as our secrets. So when I shared my avoidance of credit card bills, it started to take away the fear. Ultimately, talking about it took away the power of my fear.”
get “hands on”
Some practical “hands-on” measures can also dispel fears of credit card debt, if gradually.
“Sometimes it’s easier to bury your head in the sand, but coming up with a good plan for paying off your credit card debt is critical,” said Ted Rossman, senior industry analyst at Bankrate.com. “My top recommendation is to sign up for a 0 % balance transfer card, which suspends the interest clock for up to 21 months.”
Other good strategies might include using a low-interest personal loan as a form of debt consolidation, or working with a reputable nonprofit credit counseling agency.
“If you have good credit, personal loan interest rates can be as low as about 6 percent over five years, and debt management plans from reputable credit counselors often have similar terms and apply more broadly,” Rothman said.
Personal finance fundamentals are also important.
“Accelerate your debt repayment strategy by finding ways to increase your income and/or reduce your expenses,” adds Rothman. “Ideas might include starting a side business, selling things you don’t need or cancelling subscription services you rarely use, and eating out less often.”