Collector - May 2017 - 10
FYI 34 24 THE FACTORS BEHIND OVERSPENDING INCOME HOUSEHOLD INCOME OF LESS THAN $50,000 MALL HOUSEHOLD INCOME IS $100,000 OR MORE STRESS EXCITEMENT 18 26 Source: NerdWallet MEN WOMEN 24 MEN 35 WOMEN Emotional Overcharge Why are Americans charging beyond their means? E motional spending happens when you buy something you don't need or want, and as it turns out Americans love to spend. According to a recent NerdWallet survey, almost half of U.S. consumers say emotions have caused them to spend more than they can reasonably afford. The study found that only 10 percent of consumers incur credit card debt because their incomes won't cover necessities. So why do Americans overspend? "Americans get into debt for varied reasons," said Sean McQuay, NerdWallet's credit and banking expert. "Some of us use debt to make ends meet, while most of us overspend on stuff we don't need." Former financial planner Gary Foreman from CreditCards.com explained a few reasons behind emotional overspending. The first is power-the power to make decisions 10 and back them up makes consumers feel good. The second is immediate gratification. Credit cards give consumers the ability to make purchases on demand and delay the consequences of payment until later. The NerdWallet study shows overspending differs among gender-women are more likely than men to say stress causes them to overspend (35 percent vs. 24 percent), while men are more likely to say excitement causes them to overspend (26 percent vs. 18 percent). Even income affects overspending rates. Consumers with a household income of less than $50,000 are more likely to overspend due to stress than those whose household income is $100,000 or more. What consumer spending trends are we seeing right now? Consumer credit delinquency rates are expected to rise this year. In the third quarter of 2016, consumers accumulated nearly $22 billion in credit card debt, according to a WalletHub study. This marked a 34 percent increase in credit card debt since 2014 and is nearly 60 percent above the postGreat Recession average. By the end of 2016, credit card debt topped $1 trillion, according to The Nilson Report. This rise, coupled with the expected interest rate increase in 2017, led TransUnion to predict that credit card delinquency rates will be up this year. It noted that last year the percentage of subprime accounts reached its highest level since the end of 2010. As long as consumers are letting emotions dictate their shopping, causing them to spend beyond their means, the accumulation of debt will continue to weigh them down. ACAINTERNATIONAL.ORG