US Credit Card Debt at $800 Billion
ATLANTA -- While Americans continue to pay off debts and reduce spending, Equifax, one of the leading nationwide credit reporting agencies, finds many households still carry a heavy debt burden -- in some cases owing up to 17 percent of their income to credit card companies alone.
No one region of the country is shouldering the credit card debt burden -- Equifax found the top 50 metropolitan statistical areas (MSAs) hardest hit by credit card debt, as a percentage of income owed in 2010, are clustered in six states across the country: Florida, North Carolina, Ohio, Texas, Washington and California.
These states also have some of the highest total credit card balances.Equifax reports that while total consumer debt (mortgage, auto, credit card, etc.) has declined 8.2 percent from its peak of $11.5 trillion in October 2008, 54 million American households still owe more than $800 billion in debt to credit card companies alone -- irrespective of other debts such as mortgages or students loans.
"The good news is we're seeing Americans paying off their debts and becoming more fiscally fit," says Dianne Bernez, Equifax's senior vice president for corporate communications. "However, the numbers show that while people's intentions are good, Americans still have a lot of debt to tackle and often don't know where to start."
To help Americans get started, Equifax, along with financial expert and New York Times bestselling author David Bach, have launched the Debt Free Challenge -- encouraging 1 million Americans to pay off $1 billion in debt.
"I would encourage people to look at these numbers and then take a good look at what their share is -- a lot of people don't actually know how much debt they're in," says Bach, author of Debt Free for Life: The Finish Rich Plan for Financial Freedom. "Only then can you make a plan of action to pay down your debt."
Bach has been teaching a method known as done on last payment (DOLP), also known as debt stacking, for more than a decade, whereby consumers prioritize their debts to maximize their savings in interest and accelerate their payments in a methodical manner to get out of debt faster. For those looking to automate this process, Debt Wise(TM) powered by Equifax is an online tool that uses the information already on your credit report to prioritize debts and help you set a plan of action to reach your Debt Freedom Day -- a day when all of your debts have been paid off.
"Pledging to get out of debt can really help people get started on their journey toward financial freedom -- setting a goal helps you stick to your plan," says Bach. "And remember that you're not alone -- taking the pledge are your neighbors, co-workers and friends -- this is doable and there are tools out there to help you."
For more information about David Bach, visit www.finishrich.com. To learn more about the Debt Free Challenge, visit www.debtfreechallenge.com.