Americans Cut Spending but Still Can't Escape Debt, Study Finds
A Freedom Debt Relief and Money.com study finds nearly half of heavily indebted Americans can only make minimum payments or are already behind.
Americans burdened by significant unsecured debt are trimming daily expenses and tapping retirement savings, yet remain trapped in a cycle of borrowing they cannot escape, according to a new study conducted by Freedom Debt Relief and Money.com.
Nearly half of respondents said they are either making only minimum payments on their obligations or have fallen behind entirely — a sign that spending cuts alone are not enough to overcome mounting balances. The findings underscore how persistent high interest rates continue to erode borrowers' ability to reduce principal, even when households are actively trying to rein in costs.
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Perhaps the most striking data point: 79% of those surveyed said they would willingly accept a decline in their credit score if it meant becoming debt-free at a faster pace. That willingness suggests many indebted consumers have shifted their priorities away from creditworthiness and toward financial survival, a meaningful attitudinal shift that could have long-term implications for lending markets.
The study adds to a growing body of evidence that unsecured debt — including credit cards and personal loans — has become an increasingly heavy burden for American households. Retirement account withdrawals, which carry tax penalties and long-term savings consequences, signal the depth of financial stress respondents are experiencing.
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