Americans are more in debt than ever. According to the Federal Reserve, at the end of 2017 non-housing consumer debt reached $3.82 trillion. Every type of debt except home equity lines of credit (HELOC) increased, and 80% of Americans have some form of debt in their lives. But did you know that debt differs for men versus women?
Research shows a significant gender disparity in the numbers for credit card debt. Regarding debt level, credit card balances, and even credit score, the data varies signficantly between the sexes. Here are some of the shocking figures.
More women have credit card debt
Research presented by Quicken Loans showed that among women and men age 18-24, 63% of the women carry credit card debt compared to just 36% of men. Among people age 55-64, 33% of men carry credit debt while twice as many women of the same age have credit card debt. Even though more women have plastic debt than men, the balances differ.
Men have higher card balances and credit scores
While more women carry credit card debt, the data shows that men have higher balances than women. Men average $25,000 in credit card debt while women owe roughly $21,000. Despite men having higher balances, it's women that have lower credit scores. Women average a FICO score of 621 while men fared better at 630.
Why are more women in debt than men?
There are many reasons women might be more likely to get into credit card debt than men.
- Gender wage gap
Women often earn less than men for the same job, even with equivalent education and experience at the rate of about 70 cents on the dollar.
- More debt from the start
Research from Credit Sesame shows that more women graduate with more student loans and this can snowball into even greater overall debt.
- Time off from work
Women are more likely than men to take time out of their careers to raise children, and that can affect earnings potential.
Getting out of debt with bankruptcy
If you’re a woman struggling with debt, bankruptcy might be the best solution to get you on a better financial path. Credit cards, medical bills, and old income taxes and utility bills, can be discharged within a few months using Chapter 7 bankruptcy. Under Chapter 13 bankruptcy, you can catch up on secured debt and discharge unsecured debt too.
There are many options to get out of debt and bankruptcy isn’t right for everyone. If you do choose bankruptcy, it’s crucial to start rebuilding your credit immediately after you get your discharge of debt from the court. Bankruptcy can even put you on a path to a better credit score that could close the gender gap in FICO scores.
How to get started rebuilding credit
Whether you’ve got a fresh start thanks to bankruptcy or got your debt under control another way, re-establishing credit takes time and should be done methodically. It’s also important to know that your credit won’t get better on its own. If you’ve struggled with credit card debt in the past, you may have some aversion to plastic, but cards are the best way to rebuild credit.
If you don’t have any credit cards and have a lower score, you’ll likely need to start with a secured card. You put down a deposit, and the line of credit matches the deposit. The card reports to the credit bureaus so using it responsibly can boost your score and open doors to other credit products. To equip you on your journey to better credit, check out Credit Score Keys.