NerdWallet Survey: Nearly Half of Americans Emotionally Overspend

Erin El Issa
By Erin El Issa 
Edited by Paul Soucy

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It’s not a topic brought up at many dinner parties, but credit card debt isn’t a fringe issue. Almost two-thirds of Americans (64%) have credit card debt now or have had it in the past, according to a NerdWallet survey, and that debt seems to be fraught with emotion.

In an online survey of more than 2,000 U.S. adults, commissioned by NerdWallet and conducted by Harris Poll, we asked about acceptable and embarrassing reasons to go into debt, the emotions behind overspending and the common ways we think people get into debt. Here’s what we found out about the psychology of debt in America:

  • Almost half of Americans (49%) say emotions have caused them to spend more than they can reasonably afford.

  • Most Americans (86%) say there are acceptable reasons to go into credit card debt, but about as many (87%) say they would be embarrassed to go into credit card debt.

  • More than a third of Americans (36%) say credit card companies should stop charging interest on balances to improve the consumer credit card debt situation.

Debt happens; here’s why

People get into consumer debt for many reasons, but as consumers, we tend to assume the worst.

Americans think they’re irresponsibly spending themselves into debt

Three in five Americans (60%) believe that the most common way people get into credit card debt is by spending more they can afford on unnecessary purchases. People with higher household incomes are more likely to make this assumption than those in lower-earning households — 65% of Americans with a household income of $100,000 or more believe this, compared with 52% of those with a household income of less than $50,000.

Only 10% of Americans say the most common reason for credit card debt is that people’s incomes won’t cover necessities. Younger people are more likely to say this than some of their older counterparts, with 13% of millennials (ages 18-34) citing this compared to only 7% of adults ages 45-64.

According to another recent NerdWallet study, the cost of living in America has increased faster than incomes. The spread is more significant for Americans in large cities with expensive housing and Americans with ongoing health problems — so it’s entirely possible that many Americans simply can’t make ends meet without the help of credit cards.

Sean McQuay, NerdWallet’s credit and banking expert, says, “Americans get into debt for varied reasons. Some of us use debt to make ends meet, while most of us overspend on stuff we don’t need.

“If I could make one golden rule for personal finance, it’d be this: Spend according to your own needs and financial situation, not your friends’ and neighbors’. Don’t keep up with the Joneses — and don’t judge them either. We each have our own personal financial situation, and it’s surprisingly hard to compare superficially.”

About half of us emotionally overspend

Whether we’re overspending for necessities or nonnecessities, many of us seem to be motivated by emotion. Nearly half of Americans (49%) say emotions cause them to spend more than they can reasonably afford. Younger adults are more likely to say they overspend due to emotions than older adults (67% of millennials say so vs. 29% of boomers 65 and older).

Of those who say emotions cause them to spend more than they can reasonably afford, 29% say they’re most likely to overspend due to stress, 22% say excitement and 13% say sadness.

Among those who overspend due to emotions, women are more likely than men to say stress causes them to overspend (35% vs. 24%), while men are more likely to say excitement (26% vs. 18%). Those who have 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 (34% vs. 24%).

“Strong emotions tend to drive us to spend extra, and that’s life,” McQuay says. “Try to keep emotional spending — whether it’s during times of celebration or stress — low enough that your finances aren’t significantly impacted. You don’t want today’s emotions to drain your bank account at the expense of your future self.”

Embarrassment and acceptance

Not all debt is equal, nor are all ways of going into debt. We asked Americans about which reasons they think are acceptable for going into debt and which reasons would cause embarrassment.

Most believe there are “acceptable” reasons for going into debt

People often reference “good debt” and “bad debt,” with mortgages and student loans being good and credit card debt usually considered bad. However, more than 4 in 5 Americans (86%) believe there is at least one acceptable reason for going into credit card debt.

Americans say the most acceptable reasons for going into credit card debt are emergency purchases, medical expenses and covering necessary expenses during periods of unemployment. Far fewer Americans seem to view cash advances, unnecessary purchases they can’t afford and nonemergency travel expenses as acceptable reasons.

Most would be embarrassed to go into credit card debt

While 86% say there are acceptable reasons for going into credit card debt, slightly more (87%) would be embarrassed to go into credit card debt. Unsurprisingly, the reasons they’d be embarrassed to get into credit card debt are very different from the reasons they find acceptable.

The most embarrassing reasons for going into debt are overspending on unnecessary purchases, nonemergency travel expenses and cash advances.

“Whether your debt comes with shame or pride, work to pay it off,” McQuay says. “Money spent on interest payments is money not saved and money not spent where you wanted. Channel any shame you feel about your debt into paying it off as quickly as reasonably possible.”

Getting rid of debt: Who’s to blame and how to move past it

We have debt, and our feelings about it are mixed, but who’s to blame for it? While many Americans say consumer credit card debt is solely the fault of individual cardholders, there are plenty of consumers who believe credit card companies, product marketers and employers could help improve the situation.

Whose fault is it anyway?

Almost two-thirds of Americans (63%) say individual cardholders are the only ones to blame for consumer credit card debt. In other words, consumers, not outside influences, are responsible for their debt. Younger Americans are less likely to believe this than some older age groups, with only 58% of millennials pinning blame solely on cardholders compared to 68% of 45-54 year olds and 66% of those ages 65+.

When it comes to actions that would improve Americans’ credit card debt situation, more than two-thirds (68%) say individual consumers could reduce their overall spending. And while most Americans say individuals are solely responsible for getting into credit card debt, plenty of people see ways that outside parties could help them get out of it.

More than a third of Americans (36%) say credit card companies could stop charging interest on balances. One-third (33%) say marketers could stop promoting products and services to those with less discretionary income. More than a quarter (26%) say employers could pay their employees more to improve the consumer credit card debt situation.

How to improve your credit card debt situation

McQuay says, “As consumers, we have very little control over the interest rates charged by banks or how they market their products to us. What we can control is how we deal with our credit card balances — starting with a plan to pay off our debt once and for all.”

Ready to get out of credit card debt for good? Here’s how to get started:

Stop charging. The first step to getting out of debt is to stop increasing it. Credit cards are a fantastic tool to build credit and earn rewards, but as long as you’re paying interest, they’re a bad deal.

Make a list of your balances and choose a payoff plan. List your credit card debts, along with their interest rates. Two popular debt payoff strategies are the snowball method and the high interest plan. With each, you focus on knocking out one balance at a time, while paying the minimums on all your other cards.

  • Snowball method: Pay your balances from smallest to largest. This strategy gets you quick wins, building momentum and helping you stay motivated.

  • High interest plan: Pay your balances from highest interest rate to lowest rate. This is more mathematically sound, saving you the most in interest.

Find extra money in your budget to go toward debt. The faster you pay off your debt, the more you’ll save in interest. Create more money in your budget by increasing your income and/or decreasing your expenses and redirecting the extra cash toward the card you’re focusing on paying off.

Pay it off. You’ve stopped accumulating debt, chosen a debt payoff plan and freed up extra cash, so now it’s time to pay off your balances. Don’t get disheartened if this takes a while — every dollar above the minimum you pay on your credit card saves you money and gets you closer to debt freedom.


This survey was conducted online within the U.S. by Harris Poll on behalf of NerdWallet Dec. 5-7, 2016, among 2,062 adults ages 18 and older. This online survey is not based on a probability sample, and therefore no estimate of theoretical sampling error can be calculated. For complete survey methodology, including weighting variables, please contact [email protected].

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