The Main Reason For Credit Card Debt

Borrowing, Credit Cards

It’s no surprise why many Americans struggle with credit card debt – we spend more on our credit cards than we pay off at the end of the month. What are the expenses that drive that debt? It’s probably not what you think.

Based on a new survey from by LendingTree, the majority of credit card debt doesn’t come from frivolous spending – this is obtained from basic expenses. 42% of survey respondents cited making ends meet as the biggest reason for their credit card debt, well ahead of car repairs at 29% and medical bills at 27%.

Some reasons listed in the survey are relatively easy to control, such as eating out and clothes shopping (both taking the fourth place at 22% each). Millennials were more inclined to indulge in these two expenses, with 31% reporting eating out as a main reason for their debt – the second-highest debt excuse among this age group.

Millennials also tend to be stressed out from their debt. Of the respondents with credit card debt, 86% below age 35 reported being very or somewhat stressed by their debt, as opposed to 72% of those beyond 35 years old.

In the case of eating out or clothes shopping, it’s mostly a matter of willpower to correct the situation. You already know where the problem lies, and how to fix it. However, if making ends meet is the primary cause of your credit card debt, perhaps it’s time to take an even harder look at your budget.

Greg McBride, Chief Financial Analyst for, advises, “Force yourself to keep track of your expenses, calibrate the amount you’re bringing in on your net income with what’s going out the door. This is really your scorecard to tell you whether or not you’re living within your means.”

Review your budget carefully. How many of those monthly items are really needs? You need a cellphone, but can you get by with a less expensive plan? Can you eat out less? Do you have any monthly subscriptions that you don’t use or don’t bring you good value in return? Include the income side of the budget in your analysis. Can you bring in more money through a second job or a gig on the side?

Try to find enough savings to have a surplus at the end of the month to allow you to pay down existing debt, no matter how small. Don’t settle for breaking even.

Given a surplus, you may be able to use a balance transfer card that allows you to incorporate all your credit card debts into that card and use the introductory interest-free period (usually 12-21 months) to pay down the debt more efficiently. Sean McQuay, Credit and Banking Expert at NerdWallet, reminds you that with a balance transfer card, “you are still going to owe the money for that debt, but it gives you some room [to] figure out how you are going to budget … how you are going to pay off that debt.”

Once you are debt-free, maintain your monthly surplus so you can start accumulating savings to avoid debt in the future. McBride calls an emergency savings fund “the buffer between you and high interest rate debt.”

Be careful with a balance transfer card – if you can’t control spending and maintain a surplus that allows you to pay down the debt, you’ll have compounded the problem. You’ll still have high-interest rate credit card debt with a higher balance than you had before, and perhaps a higher interest rate. Making ends meet will become just one of the many reasons behind your credit card debt.

If you want more credit, check out our list of credit card offers.

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