A July survey of U.S. adults who reported substantial unsecured debt found 28% could afford only minimum payments, highlighting the difficulty of reducing balances while interest adds to borrowing costs.
Freedom Debt Relief and Money.com surveyed 1,800 adults who reported at least $10,000 in unsecured debt, excluding student loans. Another 20% said they were behind on at least one account. The findings describe the respondents, rather than U.S. borrowers as a whole.
Many had already cut optional spending: 41% said they had stopped dining out or ordering delivery, and 40% had stopped nonessential online shopping. “Many people are already making difficult tradeoffs,” said Sean Fox, president of Freedom Debt Relief.
Interest can make those choices harder. The Federal Reserve reported a 22.36% annualized rate in August for commercial-bank credit card accounts assessed interest. That aggregate figure does not represent every borrower’s rate.
For someone assessing what they can pay, the Consumer Financial Protection Bureau (CFPB) provides a worksheet that sets monthly income against costs such as housing, food, health care, transportation and existing debt payments. Subtracting expenses from income shows what remains to allocate to savings or extra debt payments.
If income after essential expenses cannot cover minimum card payments, the CFPB advises borrowers to contact the issuer promptly, explain what they can afford and ask for a change. Depending on the creditor, relief may mean shifting a due date, reducing the required payment or cutting interest and fees.
When there is money for an extra payment, the agency describes two ways to direct it while keeping up minimums on other debts. Paying down the highest-rate balance first reduces interest costs. Clearing the smallest balance first can provide a quicker sense of progress, though it may cost more overall. The CFPB also says even a small reserve for unexpected expenses can limit the need to borrow again.
Other options carry costs of their own. A promotional 0% balance transfer may have a fee, while a consolidation loan can lower the monthly bill by extending repayment and increasing the total paid. The Federal Trade Commission warns that debt settlement can leave balances unresolved as late fees and interest build, while damaging the borrower’s credit.
