Today Mr. Cooper announced the results of a nationwide survey of 1,155 Americans, showing that household debt and credit are key drivers of stress during the holiday season. The results indicate that almost half of Americans are already in credit card debt, and a third said that they “at least somewhat wished they could skip the holiday season rather than spend money on gifts.”
“U.S. consumer debt is growing by half a trillion dollars each year, and we are seeing the stress of debt take its toll on Americans,” said Jay Bray, CEO of Mr. Cooper. “Our data confirms that the debt crisis is an ongoing issue. With home equity at its highest levels since before the crisis, the home has become the most important asset most consumers have. Our goal at Mr. Cooper is to help our 3 million-plus customers better manage that asset while also offering services, tools, and education that can support their personal balance sheets and financial health goals.”
The survey, titled, “Holiday Hope: Don’t Let Debt Get you Down,” revealed that:
- Thirty-three percent of Americans at least somewhat wished they could skip the holiday season rather than spend money on gifts.
- Forty-six percent of Americans have credit card debt.
- Fifty-two percent of Americans who purchase holiday gifts either won’t define a budget this yea, or will set a budget but have trouble sticking to it.
- Thirty-two percent of Americans who purchase holiday gifts will pay with credit cards.
- In terms of resolving their holiday debt burden, 21 percent of Americans who incurred credit card debt last holiday season took six months or longer to pay it off.
Tips for Paying Off Credit Card Debt
Everyone’s financial situation is different, but as we head into the holiday shopping season, Mr. Cooper offers the following three tips to help get ahead of debt:
- Build a budget: Managing finances and paying off debt is easier with a clear budget plan for the future. Assessing and tightly managing your overall financial situation holistically — including a clear view of your total expenses, assets, and income — is the best way to approach debt management.
- Consolidate your debts: Consolidation gives you the ability to combine high-interest balances with multiple monthly payments into one payment, ideally with a lower interest rate. You may find that you’re able to decrease your overall monthly payment amounts. One way to consolidate credit card debt is through a cash-out refinance on your mortgage*, which allows you to turn your home equity into cash. The cash could then be used to pay off or consolidate high-interest credit card debt, or to fund a large purchase or home improvement project.
- Always be mindful of interest rates: Your credit card or existing mortgage interest rates may be higher than you think. Take a deep dive into your statements to understand what you’re really paying. You may want to consider refinancing your mortgage to optimize your interest rate.
Mr. Cooper conducted this survey as a part of its overall strategy to bring a customer-centric approach to the mortgage industry and better understand and serve its customers. Mr. Cooper is developing new technologies and processes to ensure its customers are educated on how to best manage debt while also optimizing their household finances, and ultimately making the dream of homeownership more attainable for Americans. The brand name Mr. Cooper is a key part of this customer-first strategy, unveiled in August for the mortgage servicing and originations operation of Nationstar Mortgage LLC. The Mr. Cooper brand is a tangible expression of the company’s dedication to making the mortgage process more rewarding for its more than 3 million customers.
*A cash-out or debt consolidation refinance increases your mortgage debt and reduces the equity you may have in your home. Your monthly mortgage payments may be higher. A debt consolidation refinance extends the term on shorter-term debt and secures such debts with your home. The relative benefits you receive from debt consolidation will vary depending on your individual circumstances, including the interest rate and remaining term on your existing debts. Since a refinance may have a longer term than some of the debts you are consolidating, consolidating debts may not reduce your interest costs or pay off your debts sooner.
By refinancing your existing mortgage, your total finance charges may be higher over the life of the loan.
All figures, unless otherwise stated, are from YouGov PLC. Total sample size was 1,155 adults. Fieldwork was undertaken between Nov. 1-2, 2017. The survey was carried out online. The figures have been weighted and are representative of all US adults (aged 18+).