Credit card debt is one of the most common financial burdens for people in South Carolina and across the country. In fact, statistics show that the average family carries a credit card balance of about $16,000. This may be spread over multiple cards. More startling is new research showing that many Americans may have a psychological block preventing them from paying down their debt.
About 20 percent of consumers pay only the minimum monthly payment even when they can afford to pay more. Research from the National Bureau of Economic Research suggests that people may be “anchoring” on the minimum payment, which is printed in large font at the center of the bill. Anchoring is a psychological phenomenon that occurs when someone allows one piece of information – sometimes trivial information — to determine important decisions. In this case, people see the minimum payment and anchor on that amount each month.
Economists say credit card companies would do consumers a service by providing more information about the length of time one takes to pay off a debt using the minimum amount. Debtors anchoring on the minimum payment may see their balance grow with new charges, fees and penalties each month. They may have no understanding of how to get out of the trap.
South Carolina residents who feel they are trapped by credit card debt may understand too late how futile it is to pay the minimum amount. When debt becomes overwhelming and affects one’s day to day living, many look for a relief from the burden. Contacting a bankruptcy attorney to discuss the options for debt relief may be the first step to a brighter future.
Source: wect.com, “Anchoring: Why credit card debt weighs you down”, April 13, 2017