If you have credit card debt, it may be time to scale back what you spend on luxury purchases.
But we’re not talking about doing without small luxuries like your morning coffee or an afternoon snack – things like your car loan or lease, leisure travel, dining and more can make a bigger difference.
A new CreditCards.com poll shows U.S. consumers who have credit card debt are outspending debt-free households in seven of nine discretionary spending categories (see chart). However, few are willing to cut back on any of their luxury purchases.
In fact, 18 percent of Americans who have credit card debt are unwilling to trim expenses in nine categories, including dining out, leisure travel and clothing (see chart). This despite the fact that the average credit card APR is nearly 18 percent.
[...]Our luxury spending poll also found:
- Many can live without dining out. Dining and takeout is the category all respondents – in debt or not – are most willing to cut in half. Still, less than half of those with credit card debt (48 percent) would trim their dining budgets, which average $2,186 per year.
- But vacations are a big budget item many won’t budge on. The average household with card debt spends $2,211 per year on leisure travel. But only 3 in 10 of those respondents would be willing to cut their travel spending in half.
- Cars, haircuts and cellphone plans are the biggest must-haves. The three categories people in debt were least willing to cut in half are personal care and beauty (23 percent), cellphone services and upgrades (25 percent) and car loans or leases (26 percent).
- Cut my streaming? You’re dreaming. Only 39 percent of respondents with debt would be willing to cut back on subscriptions services such as Netflix, Spotify and Xbox Live. However, at $1,198 per year, it’s the second-least-costly luxury expense among this group.
https://www.creditcards.com/credit-card-news/luxury-spending-poll/
(Score: 2) by driverless on Saturday July 13 2019, @07:28AM (2 children)
Can someone from the US explain what "APR" is? I keep seeing this in relation to loans, but every time it's used whoever uses it assumes you already know what it means. A google search just turns up more examples of writers who assume you already know what an APR is. What is it?
(Score: 2) by linuxrocks123 on Saturday July 13 2019, @08:24AM (1 child)
It's the interest rate charged on the credit card balance, annualized without regard to the fact that monthly compounding of the interest on the debt is happening, since that way the number looks lower for advertising purposes.
APY, or Annual Percentage Yield, is used by banks to advertise the rates they give you on CD and savings accounts, and includes the additional amount you get from letting the balance compound monthly, since that way the number looks higher for advertising purposes. But, to be fair to the banks, they also do quote you the APR, just in small print.
For more info: https://en.wikipedia.org/wiki/Annual_percentage_rate [wikipedia.org]
(Score: 2) by driverless on Monday July 15 2019, @07:46AM
Thanks! Once you know that "APR" means "annual percentage rate", the definition is locatable via Google. Over here it's just called "interest rate".