Americans are dealing with record levels of credit card debt and it could be why nearly three in four Americans said credit cards are a challenge to managing finances, according to a recent survey.

Most Americans (64%) said they felt “in control of their finances,” but 79% think they could be doing a better job managing them, according to the Affirm survey. 

Topping the list of strategies used to keep finances under wraps was saving more, with 68% of Americans employing the technique in the first half of the year. A recent increase in saving is also why 76% said they felt ready for a potential recession. 

Despite the uptick in savings, the average person said they spent $350 over budget in the past six months, and 83% said they planned to adjust their budget for the remainder of the year, according to the survey.

Part of the reason why Americans may be overextending their spending is because of growing credit card debt. Credit card balances increased to a new high of $1.03 trillion in the second quarter of 2023, according to the latest report by the Federal Reserve Bank of New York. 

“The reality is that the average American has three credit cards and nearly $6,000 in revolving credit card debt, while financial institutions collect billions in late fees each year,” Affirm President Libor Michalek said. “That is a lot of money coming from consumers’ pockets when they need it most.”

If you’re struggling with high-interest debt in a troubling economy, you could consider paying it off with a personal loan at a lower interest rate. Visit Credible to compare your options without affecting your credit score.

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Buy now, pay later ranks high for controlling finances

As credit card debt spirals out of control, more Americans are seeking control and flexibility from payment options that can help them better manage their finances, according to the survey. 

Buy now, pay later (BNPL) was ranked number one, with nearly half of respondents (48%) stating that it makes them feel most in control of their finances, according to the BNPL provider.

Part of the appeal is that every time someone wants to use BNPL, they have to apply, according to Michalek. The decision to extend a loan is evaluated against a wide range of data points, including a consumer’s credit history, debt obligations, current income and purchase cost. 

Consumers can also choose the best payment option for them and their budgets.

“The very worst thing we can do is loan money to someone when it’s not responsible – for them or for us,” Michalek said. “That’s why if we think someone is overextending themselves, we’ll let them know ‘we don’t think you should buy this’ as opposed to approving them.”

If you need help funding a large purchase or project, a personal loan can be another financing option to consider. Credible makes it easy to see your pre-qualified personal loan rates from various lenders all in one place.

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Credit card perks are becoming less of a draw for many

Consumers have grown increasingly unhappy with their credit card perks as debt balances reach new highs, according to the J.D. Power 2023 U.S. Credit Card Satisfaction report. 

The dissatisfaction stems from the rewards earned per dollar spent, especially among cashback cardholders. Cardholders who paid an average of $100 or more in annual fees said they had the highest satisfaction with benefits and rewards earned, even more so than those with cards with lesser or no annual fees, the report said. 

However, cardholders paying $500 or more in annual fees said they were less happy with the rewards and benefits offered by their credit cards because of the unreasonable fees they paid, the report said. For example, airline cardholders said they were highly satisfied with rewards and benefits but were less impressed with their card terms. 

Despite the growing dissatisfaction, credit card installment plans were one perk that made consumers happy. Cardholder participation in such plans is associated with a 102-point increase in customer satisfaction (on a 1,000-point scale), the report said. 

These payment plans offer a fixed interest rate or monthly fee instead of the standard variable interest rate. The plans are similar to buy now, pay later, or an extended payment plan and are designed to make it easier for cardholders to pay down certain purchases by separating them from the card’s balance.  

If you’re worried about high-interest debt, you could consider paying it off with a personal loan at a lower rate to reduce your monthly payments. Visit Credible to get your personalized rate in minutes.

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