Do you have credit card debt?
If the answer is “yes,” maybe you should have taken our recent survey of about 1,100 people with self-reported credit card debt. We asked each respondent six straightforward questions:
1. Do you have difficulty resisting a sale?
2. Do you often buy items you want but don’t need?
3. Do you carry a balance on your credit card from one month to the next?
4. Do you pay only the minimum amount on your credit cards?
5. Have you paid a late fee or over the limit fee in the last year?
6. Do you know how long it will take to pay off your credit card debt by making only the minimum payments?
After collecting the responses, we dissected the data six ways from Sunday. Translation: We applied rigorous statistical analysis to tease out relationships that might not be apparent from casual observation and pinpoint key gender and age differences.
To be honest, some of our findings weren’t outrageously exciting. We pretty much expected those results – and actually confirmed some assumptions that form the basis of our debt relief offerings. It’s always gratifying to learn that your business model is based on sound foundations.
Other findings, however, weren’t entirely expected. Some have interesting implications for what we do and may lead us to tweak or improve our services in the coming months. A few even raised new questions that we’ll likely investigate further in future surveys and reports. For now, let’s take a look at the results of our most recent credit card debt survey.
Survey Methodology at a Glance
As surveys go, this one was relatively simple. We asked prospective respondents an initial screening question: “Do you have credit card debt?” Those who answered “no” were excluded from the remainder of the survey. Each of the 1,107 respondents who answered “yes” was asked the six follow-up questions displayed above.
Once the survey was complete, we analyzed the responses by age and gender. Respondents were grouped into male and female gender categories. Age groups were as follows:
- 65 and over
We calculated the percentage of males and females who answered each question affirmatively and negatively, determining statistically significant differences as appropriate. We did the same with each age group. We also cross-tabulated the responses by age and gender to determine whether males and females of the same age group had similar or divergent relationships with credit.
The survey had a margin of error of 3 percent.
A Much-Anticipated “Credit Battle of the Sexes” Underwhelms
Let’s get one thing out of the way first: the differences we found between males and females. You can call it the battle of the sexes, Mars against Venus, the War of the Roses or any appropriate metaphor you like, but the basic truth remains the same: Folks are willing to look for just about any reason to one-up members of the opposite sex, particularly when it comes to financial matters.
Unfortunately for those craving some debt-related drama, our gender-related findings were relatively underwhelming. As noted in a recent U.S. News article that mentioned this survey, the only major difference between genders was this: Younger and older women are more likely to carry credit card debt than men of the same age.
Specifically, 63 percent of women aged 18-24 carried some amount of credit card debt. Only 36 percent of men in the same age group had any credit card debt. Likewise, 66 percent of women aged 55-64 carried credit card debt. Just 33 percent of men aged 55-64 were in hock.
Both differences are statistically significant. They’re – by far – the largest gender differences on any of the questions we asked. Although other questions saw some variation between male and female responses, all were more muted – and if there’s any consolation to be had for female readers, it’s that other data indicated slight but significant trend toward male recklessness. In other words, males were slightly more likely to be unable to resist sales and buy things that they wanted but didn’t need.
Battle of the sexes aside, our survey did uncover some interesting differences in how respondents say they manage their credit cards. In many cases, younger folks appeared less able to resist activities that could result in future credit card debt – and less able or willing to recognize or admit that they might be heading down a treacherous financial path.
These differences were particularly pronounced on questions like “Do you have difficulty resisting a sale?” On that one, more than one-quarter of respondents aged 18-24 and 25-34 said that they were completely unable to resist sales. By contrast, about 12 percent of respondents aged 55-64 answered in the same manner. The “completely unable” response rate for respondents aged 65 and over was a minuscule 5.4 percent.
It’s important to note that none of these results – neither gender-related nor age-related – establish causation. They merely tease out trends and suggest areas for further investigation. If there’s any takeaway to be garnered from them, it’s that everyone could benefit from better financial education and a more disciplined approach to credit card debt management.
As National Debt Relief vice president of client services Chris Rojas noted in the U.S. News article, “Both men and women [of all ages] can benefit from more financial education and guidance when it comes to debt control.”
In the following sections, we’ll take a closer look at the responses to each survey question.
It’s an age-old – and super-important – question: “Do you have difficulty resisting a sale?” Many relationships have ended – or at least found themselves on the rocks – over this question.
Overall, we found that 23.5 percent of men and 20.5 percent of women cannot resist a sale. Women were a bit more likely to be ambivalent about sales: 38.2 percent responded with “It depends, I can sometimes resist a sale,” while only 33.9 percent of men said the same.
As noted above, millenials were much less likely to be able to resist sales. Perhaps due to decades of conditioning against ubiquitous and ever-changing advertising tactics, older folks were far more likely to draw a line in the proverbial sand and avoid purchases that could mean the difference between a clean balance sheet and a persistent pile of debt.
Wants Versus Needs
When you were in elementary school, you probably suffered through a lesson about the basic differences between “wants” and “needs.” According to teacher, “needs” are the sorts of things you’d die – or at least be extremely uncomfortable – without. We’re talking about food, water and shelter.
“Wants,” on the other hand, are certainly nice – but not essential – to have. Classic “wants” include brand-new smartphones, late-model cars and tickets to your favorite band’s next show.
It doesn’t take a rocket scientist to figure out which product category is more likely to cause credit card-related pain down the line. Buying too many “wants” without properly budgeting for your purchases is a classic cause of serious credit card debt.
Regardless of gender, a majority of respondents said that they’re prone to buying “wants” in addition to “needs.” 58.2 of women admitted to doing so. Fully 61 percent of men did as well.
Age played a much larger role in impulse control. According to our results, a majority of all respondents aged 18 to 44 admitted to “often” buying items that they wanted but didn’t need. The most vulnerable group: respondents aged 25-34.
By contrast, mature respondents aged 55 and older found it much easier to resist. Just 43.4 of 55-64 year-olds and 29.3 percent of senior citizens said that they’d recently bought something they didn’t need. Perhaps frugality gets easier with age.
Carrying a Monthly Balance
Here’s a little secret: Credit card companies really want you to carry a monthly balance on your card. In fact, so-called “balance carriers” represent a huge profit driver for most credit card issuers. Cardholders who pay off their balances in full each month don’t ever pay interest, robbing their issuers of a valuable revenue stream.
It’s okay to run a balance every once in a while, particularly if you need to pay for a large, unforeseen expense – for instance, an emergency room bill or major car repair outlay. That said, carrying a persistent monthly balance can blow a hole through your budget and drain your savings.
With this in mind, you might be sobered – or gratified – to learn that a majority of our survey’s respondents carried a monthly balance on a regular basis. 59.7 percent of women say that this is the case for them. 57.2 percent of men do as well. In addition, 17 percent of women and 19.7 percent of men say that they carry a balance “occasionally.” Although we didn’t define “occasionally,” we can assume that this means anywhere from one to six months in a calendar year.
Paying the Minimum
Carrying a long-term monthly balance isn’t great for your finances. Only making the minimum payment on that balance is downright counterproductive. That’s because the minimum payment is often fixed at a comically low level. By paying barely enough to keep up with the accumulation of interest on your card balance, you could be consigning yourself to thousands of dollars in needless interest charges and years of obligation to your gleeful credit card issuer.
Of course, this reality doesn’t stop millions of American credit card holders from carrying long-term balances on which they make only the minimum payment – and we’re certainly not in the business of judging those who do.
According to our survey results, 52.6 percent of women and 50.2 percent of men admitted to only paying the monthly minimum on their credit cards. An additional 22.3 percent of women and 21.9 percent of men report doing so occasionally. Again, age plays a significant role in these responses: Survey participants aged 18 to 44 were far more likely to pay only the minimum than mature respondents, nearly 75 percent of whom never paid only the minimum.
Our survey didn’t calculate how much money these younger respondents were leaving on the table – and sapping from their collective monthly budgets. Come to think of it, we might not want to know the answer.
Late/Over the Limit Fees
Carrying a persistent monthly credit card balance on which you only make the minimum payment exposes you to another debt-related risk: fees for making a late payment or exceeding your credit limit.
While fees vary by issuer, you can expect to pay anywhere from $20 to $50 for making a late payment. Over the limit fees may be even steeper.
On this measure, men and women were roughly equal: 60.3 percent of women and 57.4 percent of men admitted to paying a late or over the limit fee within the past year. Surprisingly, older respondents were actually a bit more likely to pay such fees than younger folks. Although it’s not clear why this is the case, it could sap some of the force from parents’ assertions that kids are irresponsible and good for nothing.
Realistic Appraisal of Debt Versus “Debt Goggles”
There’s one last survey metric worth noting: respondents’ appraisal of the depth and breadth of their personal credit card debt. This is the metric measured by our longest question: “Do you know how long it will take to pay off your credit card debt by making only the minimum payments?”
Our goal was to determine whether respondents were truly aware of the implications of carrying a monthly balance on which they made only the minimum payments. Answers to this question also painted a basic picture of the depth of credit card debt across various age and gender groups.
We found that young people were most optimistic – perhaps unrealistic – about their ability to pay off credit card debit. Nearly half of 18-24 year-olds said that they’d be able to pay off their debts within a year without exceeding the minimum payment.
By contrast, people aged 35 and older were more clear-eyed about the prospect of long-term debt. In roughly equal proportion, members of these groups estimated that it would take at least five years to pay off their debt. Given what we know about minimum payments, this is a far more realistic assessment.
More Surveys Where This Came From…
We’d be remiss not to thank the 1,107 souls who took the time to answer our survey questions and provide us with the raw data necessary to draw these conclusions. Whether you’re a current National Debt Relief customer, want to learn more about our debt relief services or are simply passing through, we’re always looking for feedback that helps us improve our offerings and better serve our clients.