Why so many borrowers are stuck making minimum payments on their debts
Summary
A Freedom Debt Relief survey found that many borrowers with at least $10,000 in unsecured debt can afford only minimum payments or are already behind. The article says high interest rates, essential living costs, multiple debt accounts and unexpected expenses can leave borrowers with little money to pay down their balances.Key Facts
- Freedom Debt Relief surveyed 1,800 borrowers who had at least $10,000 in unsecured debt.
- In the survey, 28% said they could afford only the minimum required payments.
- Another 20% of respondents said they were behind on at least one account.
- The article says credit card APRs above 22% can cause interest to take up much of a payment.
- Among respondents, 41% said they had cut restaurant meals or food delivery, and 40% had stopped nonessential online shopping.
- About two-thirds of respondents owed money on at least three accounts, while about one-third had five or more outstanding accounts.
- The article says each debt account can add a separate minimum payment, interest charge and due date, limiting borrowers’ ability to pay extra toward balances.
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