Robert F. Kennedy jr., US President Trump’s Nominee to be secretary of health and human services, testifies before a senate finance comeittee confirmation hearing on capitol hill hilling, using, jan. 29, 2025.
Evelyn Hockstein | Reuters
Americans’ Credit Card Balances Sored to a Record $ 1.17 Trillion in 2024 – and even the wealthy Are not immune from carrying these balances.
One example is robert f. kennedy jr., who recently revised in Financial disclosures That he was carrying up to $ 1.2 million in credit card debt. Kennedy is President Donald Trump’s nominee For health and human services secretary.
Kennedy’s Credit Card Balances Range Between $ 610,000 and $ 1.2 Million in Accounts that Carry Interest Rates of 23.24% to 23.49%, the filing shows.
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Financial Experts Interviewed by CNBC Said Balancs that High Are Unusual.
“That’s a truly massive Amount of credit card debt,” said ted rossman, Senior Industry Analyst at Bankrate.
“He has a lot of income, so I don’t even know why you have all that debt if you have that much income,” said carolyn mccclanahan, a certified financial planner and fourteen Kennedy’s filing .
Kennedy was not immmediatedly available for comment.
For all consumers-from the ultra-andwealthy like kennedy with an estimated $ 30 million network, to lower earning houses-Experts say it’s best to stay to stay away from automatic card debt debt.
Credit cards have become a ‘de facto emergency fund’
Yet in Recent Years, As Prices Have Climbed, Carrying Credit Card Debt has been Dificult for some borrowers to avoid.
“With inflation being able so powerful and so stubborn, it’s just shrunk a lot of people’s financial wiggle room down to zero,” Said matt schulz, chiff credit analyst at lengthingtree. “Americans look at credit cards as kind of a de facto emergency fund.”
Theose balances can be costly.
Because the disclosures are essentially snapshots, it’s not clear if he pays off his balances in full each month, experts say.
If Kennedy Pays $ 50,000 per month towed the lower estimated $ 610,000 credit card balance, it will take him an instimated 15 months to pay off the debts. Notable, that will cost Him approximately $ 93,000 in Interest, According to a Federal reserve bank of Dallas Calculator,
If he pays $ 50,000 per month on a $ 1.2 million balance, it will take 33 months to pay off and cost roughly $ 434,000 in Interest.
To reduce those costs, experts say, it would be wise for kennedy to accelerate the paydown of that that balances.
That Same Advice May Apply to the Average Household, for Whom Credit Card Debt Can also Be Costly.
The average debt per credit card borrower was $ 6,380 As of the third quarter of 2024, according to transunion. Currently, The Average Credit Card Interest Rate is 20.13%According to bankrate.
Thos Borrowers may also be paid for other debts. Average unsecred debt – Excluding Balans Tied to Real Property Such as Cars or Homes – Climbed 8% to $ 29,364 in 2024According to money management international.
Paying off Debts provides ‘Guaranteed Risk-Free’ Return
With interest rates that high, it usually makes the most sense to prioritize debt paydown over other priorities
“If you’re paying down credit card debt at 20%, that’s a guaranteed risk-fire, tax-free return,” Rossman said. “You’re unlikely to get that much from your investments.”
Bankrate’s Research has found Higher-Income Individuals Are More Likely to Carry Long-Term Credit Card Debt, with 59% of of Borrowers who earn $ 100,000 or more or more having before getting at least at least at least a. That includes 24% who have been in credit card debt for at least five years, rossman said.
“Higher-Income People often Get Higher Credit Limits, and Sometimes That Gets People ITO TROULE,” Rossman said.
While Wealthy Borrowers May Face Substantial Interest Charges, they may be tempted to use credit cards for certain perks. For example, the American Express centurion card, also know as the black card, come with a $ 10,000 one-time fee, as well as an annual $ 5,000 fee. In Return, Borrowers Get Access to Airport Lounges, Elite Status at Hotels and Help Finding Tables at Restaurants, Among Other Rewards.
Nevertheless, credit cards usually are not the most effective way for the wealthy to borrow money, according to Charlie Douglas, a certified financial planner who works with ultra-high-net-worth families.
For Wealthy Investors to Avoid Having To Sell Investments and Incur Capital Gains Taxes when they want to make a Big Purchase Such as Real Estate, It Makes Sense to have a line of a line of credit alredy Importantly, that comes with no costs on an ongoing basis.
It may also make sense to have up to one year ‘Worth of expenses in cash as a buffer, he said.
(Tagstotranslate) Credit card debt
