FORT WASHINGTON, Penn.— More than half of U.S. homeowners carry credit card balances from month to month, with many reporting that the debt is causing them to lose sleep, feel overwhelmed and cut spending on everything from travel to groceries, according to a new survey from Newrez.
The survey found 51% of homeowners carry a monthly credit card balance. Among those homeowners, 51% said concerns about their finances have caused them to lose sleep, while 67% said they feel overwhelmed by their finances at least some of the time.
Fewer than half, 48%, said they feel in control of their finances most or all of the time.
Morning Consult conducted the survey on behalf of Newrez among 2,203 U.S. adults from June 12-14.
Debt Forcing Spending Cuts
Credit card debt also is affecting household spending and saving.
Among homeowners carrying credit card debt, 71% said they had reduced spending or saving during the previous year because of their balances.
That included 41% who cut travel and other discretionary expenses and 37% who reduced spending on groceries and other everyday costs.
Despite those pressures, homeowners continue to place a high priority on making their mortgage payments, the survey found.
Among homeowners carrying both mortgage and credit card debt, 89% said they are confident they can continue making their mortgage payments. Another 90% said they prioritize their mortgage payment over most other bills.
Most Say Debt is ‘Manageable’
Three-quarters of respondents described their credit card debt as manageable, while 84% said paying it off is a high priority.
“Homeowners are carrying a heavy financial load right now, but their belief in homeownership hasn’t wavered,” said Leslie Gillin, chief commercial officer at Newrez.
“Even with credit card debt weighing on them, they’re focused on protecting their home and taking steps to improve their financial outlook,” Gillin said.
More Than Half Explore Consolidation
The survey also found homeowners increasingly are considering ways to restructure their debt.
Among homeowners with credit card debt, 52% said they had explored consolidation options during the previous year, including personal loans, home equity loans and home equity lines of credit, or HELOCs.
Among homeowners familiar with those products, 71% viewed home equity loans as an effective way to pay off debt, while 69% said the same of HELOCs.
Newrez said the difference between credit card and other consumer borrowing rates can potentially produce substantial savings for borrowers who consolidate debt.
Example Cited
The company offered the example of a homeowner carrying an average credit card balance of $6,519 at a 19.57% interest rate.
Moving that balance to a three-year personal loan carrying an average 12.41% rate would result in approximately $1,300 in total interest, compared with nearly $2,500 if the balance remained on the credit card, according to Newrez. Paying off the credit card balance also would take approximately six months longer under the company’s example.
The findings suggest that while credit card debt is putting increasing pressure on homeowners’ household budgets, borrowers continue to prioritize their mortgages and are looking at personal loans and home equity products as potential ways to reduce higher-cost debt.
