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Credit card debtors outspend debt-free households in discretionary spending

NEW YORK – Households with credit card debt are outspending debt-free households in seven of nine discretionary spending categories, according to a new CreditCards.com report.

Here are the average annual expenses for each household*:

Category

Debtors

Non-Debtors

Car Loan/Lease

$5,096

$5,262

Leisure Travel

$2,211

$3,188

Dining/Takeout

$2,186

$2,023

Clothing, Shoes and Accessories

$1,892

$1,515

Cell Phone Services/Upgrades

$1,629

$1,326

Out-of-Home Entertainment

$1,538

$1,232

Fitness

$1,385

$1,317

Subscription Services

$1,198

$1,083

Personal Care/Beauty

$1,146

$945

In all nine categories, a minority of respondents would be willing to cut their spending by 50% in order to save money. Debtors are only slightly more likely to cut back than non-debtors:

Category

Debtors

Non-Debtors

Car Loan/Lease

26%

22%

Leisure Travel

30%

26%

Dining/Takeout

48%

44%

Clothing, Shoes and Accessories

35%

31%

Cell Phone Services/Upgrades

25%

19%

Out-of-Home Entertainment

36%

33%

Fitness

28%

18%

Subscription Services

39%

32%

Personal Care/Beauty

23%

20%

Nearly 1 in 5 (18%) Americans with credit card debt are unwilling to cut back in any of these discretionary spending categories.

“The average U.S. household spends thousands of dollars a year on non-essentials. If you’re charging these luxuries and carrying a balance, you’re spending an average of about 18% more for the privilege,” said Ted Rossman, industry analyst at CreditCards.com. “Would you have chosen the same car, plane ticket or restaurant if the price were 18% higher?”

According to the American Bankers Association, about 60% of credit cardholders carry balances from month to month. The Federal Reserve says the average household with credit card debt owes $5,700.

“For those in debt, I recommend balance transfer credit cards and looking for ways to boost your income and cut your expenses,” Rossman adds. “It’s not necessarily about going without – it’s about being an educated consumer and spending less on things you’ll still enjoy. Cutting a monthly expense is especially valuable because it comes up again and again.”

* Each category includes all households that spend in that area at least once a month (at least once a year for leisure travel)

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