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Despite a strong economy and low unemployment, millions of American credit cardholders still aren’t paying their credit card bills in full at the end of the month — and the problem is particularly acute for women, according to a new report from CompareCards.com.
One in five cardholders said they had never paid their credit cards’ monthly statement balance in full in the past six months, and there is a stark divide between men and women when it comes to paying their credit card bills. Nearly one in three women with credit cards (31%) said they had paid their credit cards’ monthly statement balances in full once or less in the past six months, while only 20% of men with cards made the same claim.
Women don’t expect things to improve for the current month either. Just over a quarter female credit cardholders (26%) said they are “not at all” confident in being able to pay their credit card bills off in full this month. That’s nearly double the percentage of men who said the same (14%).
These troubling claims are part of the findings of September’s CompareCards.com Credit Card Confidence Index. The survey of 1,049 American credit cardholders — done Sept. 6-7, 2018 by Qualtrics and commissioned by CompareCards.com — is the first edition of a monthly survey intended to gauge Americans’ confidence in their ability to pay their cards’ bills in full now and in the future as well as to track how often cardholders have paid their bills in full.
Overall, nearly half of American credit card holders (41%) said they were “very” confident of their ability to pay their credit card bill in full this month. That was the most common answer in our survey, though “not at all confident” was the second most popular at 20%. Also, a third of cardholders said they had paid their credit cards’ monthly statement balance in full in each of the past six months.
Still, among the positive numbers is cause for concern. Millions of Americans still aren’t paying their bills in full, even during good economic times. That’s especially the case for women.
That shouldn’t come as a shock, says Mary Eschelbach Hansen, economics professor at American University in Washington, D.C.
“It does not surprise me that women are less confident that they can pay off their card balance,” said Hansen, who co-authored a 2018 study that looked at gender attitudes toward debt. “Not only do women have less income on average, because they are more likely to be single parents, they may be more likely to have unexpected expenses.”
Census data shows that the median earnings for men who work full time and year-round is $52,146, while female full-time workers earn a median of just $41,977. Also, according to Census data, 81% of single-parent homes in the U.S. are led by women. But those are far from the only challenges women face.
Add it all up and it means that millions of American women are struggling financially, and Hansen says, many women are keenly aware of the difficulties they face.
“I wouldn’t necessarily view low confidence as a bad thing,” Hansen said. “I think many women are realistic about the precarious state of their finances.”
How we conducted the survey and what we found
The survey consisted of three questions, which we intend to repeat each month going forward, to track consumers’ confidence on an ongoing basis.
Question 1: “Think about all of your credit cards. On a scale of 1 to 5 (5 being very confident, 1 being not at all confident), how confident are you that you can pay the entire monthly statement balance on all of those cards IN FULL this month?”
- 41% of Americans answered that they were very confident in being able to do so. That was by far the most common answer. The second most common: “Not at all” confident at 20%.
- Men were far more confident than women were. Nearly half of all men (47%) were very confident in their ability to pay their bills in full; while just 35% of women said the same.
- Republicans were also far more likely to be very confident. Fifty percent of Republican credit cardholders said that, compared with just 37% of Independents and 35% of Democrats.
Question 2: “On a scale of 1 to 5 (5 being very confident, 1 being not at all confident), how confident are you that six months from now, you will be able to pay that month’s entire monthly statement balance on all of your credit cards IN FULL at the end of the month?”
- Forty-eight percent of cardholders said they were very confident in being able to do so. Just 13% said they were “not at all” confident. Of the five options, that was the second-least common answer.
- Women are much more confident about how things will be six months from now than they are about today. Forty-five percent of women said they were very confident (compared with 52% of men) and just 15% said they were “not at all confident.”
Question 3: “Think about the last six months in which you’ve used your credit card(s). In how many of those months have you paid your entire statement balance(s) in full? If you have more than one card, only count months where you paid ALL card balances in full.”
- One-third of respondents said they had paid in full in each of the past six months — the most popular answer. In all, 56% of Americans said they’d paid their bills in full in at least four of the last six months.
- About one in five cardholders (19%) said they had never paid their card bills in full in the past six months, the second-most common answer in the survey. Women were slightly more likely than men to say so (22% versus 16%).
- Baby boomers were the most likely age group to say they had never paid their bills in full in the past six months. Twenty-five percent of boomers said so, compared with 20% of older millennials (aged 30-37), 19% of Gen Xers and 13% of younger millennials (aged 22-29).
- Surprisingly, cardholders with household incomes between $75,000 and $99,999 were the most likely to say they never paid their card bill in full in the past six months, with 22% in that income bracket making that claim. Even 13% of those making $100,000 or more said they hadn’t paid their credit card bill off in full once in the past six months.
The bottom line
The first edition of the Credit Card Confidence Index paints a largely positive picture. Most people are at least somewhat confident that they can pay their credit card statement balance in full this month, and even more are confident that they’ll be able to do six months from now. And more than half of Americans say they’ve paid their credit card statement balances in full in at least four of the last six months. That’s all good news.
Still, all is not perfect. A large number of women are struggling to wipe out their credit card debts, and even though they seem to feel confident about the future, the difficulties they’re facing today are definitely real. That’s scary because if you’re struggling to pay down your credit card debt in good economic times, it means that you’re probably not putting enough money away for when things eventually go bad.
As we continue with the Credit Card Confidence Index, we’ll keep watching to see if these trends change. (As interest rates continue to rise and Americans’ overall card debt continues to grow, we suspect that they might.) Meanwhile, our advice for all credit cardholders remains the same: Pay your balance off as soon as possible. Life happens, so you may not be able to do it in full every single month, but that’s definitely something to aspire. After all, it’s only going to get more expensive to hold that debt, and good economic times don’t last forever, so there’s no better time than today to knock down that debt.