American credit card debt rises after holidays

HOUSTON— According to a new survey from financial website magnify money, on average Americans racked up more than a thousand dollars in debt per shopper on credit cards.

Credit card debt is piling up for folks who went wild swiping cards during the holidays.

New year, new bills.

While credit card debt is among the smallest piece of American's total debt -- mortgage debt, for example, makes up 67 percent of our total household debt, student loans 10 percent, auto loans 9 percent and credit card debt accounts for 6 percent -- there are more credit card accounts than other forms of debt, according to the Federal Reserve.

Our credit card debt totals $905 billion, according to NerdWallet, which includes those cards paid off and those still outstanding. That's an 8 percent increase over last year.

How did I get this credit card debt?

One of the biggest drivers of our credit card debt is that cost of living has been outpacing income growth.

In addition, because of our inadequate savings, many people have no way to pay for big expenses -- like medical bills or emergencies -- other than their credit card, according to NerdWallet's American Household Credit Card Debt Study.

Several major expenses grew faster than any others in the past 10 years, according to the study: medical expenses went up by 34 percent, food and beverages went up by 22 percent, and housing increased by 20 percent.

Food and beverage, arguably, you could cut back on. But the other expenses are big chunks of Americans' spending. Just the medical costs alone can throw your debt out of whack.

The average out-of-pocket medical spending per person was $1,054 according to a study by the Peterson Center on Healthcare and the Kaiser Family Foundation. If that all went on the credit card with only minimum payments made, that could result in $471 in interest and take 70 months to pay off.

There are two other situations that the study found increased the interest paid on a credit card: being self-employed and owning a home. The first results in more uncertainty in income, the second in greater responsibilities.

How do I get out of debt?

Many people report they have credit card debt because of irresponsible spending. According to the survey, the largest group of respondents, 41%, said that they are simply spending more than they should.

That's a bit of good news because it means that by pulling back on discretionary spending, you can reduce your debt.

But other common reasons for being in debt included paying for emergencies, paying for necessities not covered by income and medical expenses.

Those are more troublesome, because in many cases you don't have control over those expenses. But you can control how you pay for them.

"Charging medical bills to credit cards can seem like a simple solution, but it can actually lead to even bigger headaches down the road," Palmer says. "That's because many credit cards have high interest rates, which means the amount owed can quickly snowball out of control. Instead, ask your doctor or hospital if you can arrange an interest-free payment plan with them."

Also: be prepared for emergencies. Ensure that you have at least $1,000 set aside in an emergency fund. Also, take advantage of an employer sponsored health savings account or flexible spending account to keep you from taking on debt for medical expenses.