Americans facing dual challenge of trying to save while managing credit card debt

investmentnews.com:

Millions of Americans are finding it harder to save while adding to their debt burden with increased credit card usage.

A new anonymized analysis of self-reported financial data of Planswell users found that those with incomes above $75,000 saw a far larger increase in average credit card debt than those earning less, mostly likely due to the differing level of credit availability.

For the sub-$75K group there was a 6% increase year-over-year in average credit card debt, while three higher income bands ($75,000-100,000; $100K-150K; and above $150K) saw increases between 12% and 16%.

“The percentage of credit card debt relative to income is a striking indicator of the challenges individuals face in managing their financial obligations,” said Eric Arnold, CEO of Planswell. “These worrying trends call for a comprehensive approach to address both the root causes and consequences of mounting credit card debt for all Americans.”

Regardless of income, the analysis reveals an overall 16% increase in credit card balances.

“The surge in average credit card balances further exacerbates the financial burden on individuals and families,” expressed Arnold. “This heightened reliance on credit may indicate a coping mechanism for immediate financial needs, but it also poses risks to long-term financial health.”

Meanwhile, savings are losing steam with average monthly savings among the lowest income group down a staggering 41% in 2023 compared to 2022, with the next two highest groups showing a decrease of 21% and 13% respectively, and even a 2% decrease for those with incomes above $150,000.

“These significant reductions in average monthly savings underscore the widespread financial strain affecting Americans from all income groups,”