Are American Homeowners Experiencing a $1.2B Credit Card Crisis?

Credit cards are leading 11 million Americans—many of them millennials—to waste $1.2B by overpaying for critical home renovations.

Are American Homeowners Experiencing a $1.2B Credit Card Crisis?

Credit cards are leading 11 million Americans—many of them millennials—to waste $1.2B by overpaying for critical home renovations.

Consider this:
>> Credit cards are leading 11 million Americans—many of them millennials—to waste $1.2B by overpaying for critical home renovations.

That's according to the 2017 At-Risk Renovator Report by Hearth [https://www.gethearth.com/]—a fintech startup that helps homebuyers make smart financial decisions during renovations. Their alarming new report studies "at-risk renovators"—homeowners with older homes who urgently need improvements but don't have enough home equity to qualify for secured loans.

*** HEARTH AT-RISK RENOVATOR REPORT ***
An at-risk renovator is defined as someone who (1) has potential home equity in the 4th quartile; (2) has a home built before 2000; (3) is a homeowner; (4) is likely to do a home improvement project; and (5) has a credit score above 575.

>> 37% OF AT-RISK RENOVATORS ARE MILLENNIALS
11 million Americans qualify as at-risk renovators, and 4.1 million of them are millennials. Millennials are buying homes, but they come with their own set of financial challenges—these are older homes that urgently need renovations.

>> 20% OF AT-RISK RENOVATORS RELY ON CREDIT CARDS
There are 3 main home improvement financing options: home equity loans or lines of credit, personal loans, and credit cards. Because at-risk renovators are unlikely to have equity, they can't access the first type of loan. Most have never heard of a personal loan (a fixed monthly payment loan that doesn’t require home equity). So that leaves credit cards—which, relative to a personal loan, lead to an average overspend of about $1,000 per person on a $20,000 remodel.

>> AT-RISK RENOVATORS ARE WASTING $1.2B BY OVERSPENDING ON RENOVATIONS
Since credit card payments are easy to miss and carry high interest rates, at-risk renovators who rely on them for renovations are spending up to $1.2 billion more than they would if they used a personal loan. That's the same amount the government spends on the entire Global Climate Change Initiative.

>> AMERICA'S TOP 10 OVERSPENDING STATES
Calculated by the average potential overspend by at-risk renovators per state

#1: California ($219M)
#2: Florida ($68M)
#3: Texas ($66M)
#4: New York ($59M)
#5: Pennsylvania ($55M)
#6: New Jersey ($52M)
#7: Illinois ($50M)
#8: Washington ($50M)
#9: Ohio ($49M)
#10: Massachusetts ($44M)

For more on this report, read this: https://www.gethearth.com/blog/americas-billion-dollar-mistake/

This content is made possible by our Sponsors and the views expressed in this article may not necessarily reflect the editorial or management position of MNI Alive Media. For more information see our advertising guidelines.