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SALT LAKE CITY — 'Tis the season for racking up debt.
A 2021 survey from CreditCards.com found that 41% of American adults say going into debt during the holidays is worth it to make sure there are presents under the tree. And 60% of the cardholders already holding onto credit card debt said they would add to it for the holidays.
With that way of thinking, many Americans will be maxing out their cards between now and the Noel holiday.
Credit score impact
It begs the question: What does maxing out your plastic do to your credit score?
"If you're maxing out your credit cards, it's going to hurt your credit scores," said Rod Griffin, the senior director of public education for Experian, one of the nation's three major credit bureaus.
He says credit reporting agencies see maxed out cards as a red flag.
"The higher your balances are on your credit cards, the more risk there is you won't be able to make those payments in the future," he explained. "And your scores will come down."
Debt makes things more difficult
As is always the case, carrying debt makes things ultimately more expensive by the time you pay it off. But credit card interest rates are climbing. Having a lousy credit score and carrying extra debt is more expensive this year than it has been in a long time.
"You want your credit to be in good shape, because that's going to save you potentially tens of thousands of dollars," Griffin said.
Credit card debt climbed north of $1 trillion for the first time ever this year, according to the Federal Reserve Bank. They now total $1.08 trillion. And NerdWallet says nearly a third of shoppers who used a credit card to pay for gifts last year, still haven't paid off their balances.
