What It's Like to Owe $20K in Credit Card Debt

Living with $20,000 in credit card debt probably isn’t in most people’s financial plans, nor does it sound particularly enjoyable. But for many Americans, a debt load like that or even larger is an everyday reality, and chipping away at a high balance can be an overwhelming task.

The first and sometimes hardest step is to make a plan for paying it down. Still, just more than half of those with more than $20,000 in debt say it’s extremely likely they’ll be able to start paying down that debt this year, despite the fact that 61% said it’s extremely important they have a plan in place to do so in 2014. That’s based on the Credit.com survey Americans and Credit Card Debt, which included responses of 2,223 adults collected online from Jan. 1 to 9.

“Getting started is one thing, but being able to follow through with things that come up in life is another challenge,” says Gerri Detweiler, Credit.com’s director of consumer education. “You have to have a plan that takes into account the unexpected expenses that may come up in that time. Interest rates could go up, for example. Your income could change.”

Less than 5% of respondents to the survey (105 of them) said they had more than $20,000 in outstanding credit card debt. In fact, 44% said they don’t have any.

Dealing With Big Numbers

The weight of someone’s debt load depends on more than just a dollar figure. It’s quite possible some of the respondents with thousands of dollars of debt have the means to pay it down (15% said they have a manageable amount of debt), but even those struggling to fight the debt beast are capable of defeating it. With big undertakings like this, Detweiler says it can be a good idea to seek credit counseling.

The primary factors behind the large amount of debt varied greatly among this sample, but the most popular answer (26%) was that they used credit cards because they don’t have sufficient income to cover their expenses. Whether it was to fund a business venture, pay medical bills, get an education or indulge in shopping sprees, these people used a lot of credit cards to do it, and they realize they’ve had a debt issue for a while now.

Forty percent of this group said they have three to five credit cards (the most common response), and the next most popular amount was six to 10 cards (25%). Some respondents have felt that they have had too much credit card debt for more than five years.

Moving Forward

So what’s keeping these people from getting rid of their credit card debt? Income was cited as a huge problem for this group, but other things could be hurting them more.

The survey results indicate some potential issues beyond cash flow. The majority of this group has never considered credit card or debt consolidation, credit counseling or bankruptcy, which could save them money in the long run and help them repair their finances. Even more surprising: 86% said they have been successful at paying down credit card debt in the past. It’s unclear exactly what that means, but it could indicate a debt cycle. Perhaps there’s a lack of awareness, too. About a third of these respondents said they think they have as much credit card debt as most Americans, but at least in this survey, they’re very much outliers on the high end of the spectrum.

The best thing these consumers can do is follow through on their intentions to start combating their debt in 2014 (and for those who said they weren’t planning on it, they should reconsider). Detweiler says some people in this situation avoid taking action out of fear of damaging their credit scores, but the age range of this group trends toward middle-age and near retirement, and if debt is keeping them from planning for the future, credit scores shouldn’t be the priority.

“It’s a significant amount of debt, and it’s probably keeping you from doing other things with your money,” she said.

You can always check your credit reports and credit scores for free — you can get your free credit reports once a year from the three major credit reporting agencies, and you can see your credit scores for free using Credit.com’s Credit Report Card. The Credit Report Card is updated once a month, and it will show how different aspects of your finances impact your scores (like high debt usage, for instance).

“It’s very doable, getting out of this kind of debt,” Detweiler says. “It usually means you’re going to have to make some tough choices about your spending. Consider reaching out to a credit counseling agency. If you don’t have some sort of plan, it’s just going to continue to grow.”