How Americans Revolving Debt Has Changed Over The Years
The amount Americans owe their credit card issuers fluctuated with national events and the economic climate.
- Outstanding credit card debt as a percentage of disposable income hit an all-time low in the second quarter of 2020, then ticked up slightly to 4.54%4 in the third quarter, according to data from the American Bankers Association .
- Credit card debt as a share of disposable income hit a high of nearly 8%4 during the Great Recession in 2008, then steadily dropped over the years, reaching 6%4 in 2010, according to historical data from the ABA.
- The ABA notes that disposable income is higher than normal now due to a decrease in spending combined with federal economic assistance to consumers4.
Average Credit Card Debt By Location And Generation
After growing for eight years in a row, the average credit card balance dropped by 14% and $8793 from 2019 to 2020, according to data from Experian.
- Credit card balances fell across the U.S. and states where consumers had the heaviest debt loads saw the biggest decreases. The average balance in the District of Columbia fell by 20% to $5,6713 in 2020.
- In California, it dropped by 18% to $5,1203 and in New York, it declined by 17% to $5,4143. At the other end of the spectrum, the average credit card balance in North Dakota fell by only 8% to $4,8653.
- Americans of all ages reduced the amount of card debt owed during 2020, with older Americans decreasing theirs the most. Members of the Silent Generation paid down outstanding credit card balances by 16% to an average of $3,1773. Baby boomers lowered card debt by 12% to an average of $6,0433 while Gen Xers reduced theirs by the same percentage to an average of $7,1553. Millennials decreased outstanding credit card debt by 11% to an average of $4,3223 while the members of Gen Z old enough to have card debt lowered theirs by 6% to an average of $1,9633.
Average Credit Card Debt By State And Region
How much credit card debt the average American has is impacted by where they live.
In Q3 2020, an Experian analysis found that people living in Alaska had the highest average credit card balance at $6,617 per person. The states where people had the next highest debts were Connecticut , Virginia , New Jersey , Maryland , Texas , Georgia , District of Columbia , Florida and Hawaii .
The state with the lowest average credit card debt is Iowa with $4,289. The states with the next-lowest average credit card debts were Wisconsin , Kentucky , Idaho , Mississippi , South Dakota , Indiana , Vermont , Maine and Oregon .
Average Credit Card Debt by State
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How Much Money Can A Balance Transfer Save
If the average American with a $6,194 balance on their credit card pays $200 each month toward their debt, it will take them 42 months more than three years to pay off that debt. And they will spend $2,012 in additional interest, assuming an average 16.97% APR.
If you complete a balance transfer with promotional 0% APR period, you could save hundreds on interest. Keep in mind that most balance transfer credit cards have a one-time 3% fee.
Here is additional information on some popular balance transfer cards:
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Average Credit Card Debt In America: 2021
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Our researchers found the median debt per American family to be $2,700, while the average debt stands at $6,270. The average balance for consumers is $5,315, although some of that debt may be held on joint cards and thus double-counted. Overall, Americans owe $807 billion across almost 506 million card accounts. Below, you’ll find some of the most prominent trends that emerged.
Financial Analyst Provides Insight Into Us Credit Card Debt And How To Fix It
May 10, 2022 / 12:06 PM MDT
May 10, 2022 / 12:06 PM MDT
SALT LAKE CITY Recent news coverage has paid great attention to the national economy, covering topics from interest rates, housing markets, and the national deficit. Average American workers, however, are more likely to suffer under the burden of personal credit card debt.
ABC4 spoke with Ted Rossman, Senior Industry Analyst at Bankrate.com about the New York Federal Reserve Banks report on credit card debt in the U.S. The report includes all credit card debt for the first quarter of 2022.
Rossman expected to see an increase in total credit card debt in the U.S. but was surprised the report showed a slight decrease in total debt since quarter four of 2021. He reports that Americans had a total of $856billion dollars in credit card debt as of Q4 in 2021. That number has gone down to $841billion for Q1 in 2022, according to the New York Federal Reserve Banks report.
Rossman frames these findings by discussing how Q4 of 2019 held the record for the total highest amount of credit card debt nationwide, and how the COVID-19 pandemic likely explains consistent decreases in credit card debt until Q1 in 2021. He says people spent less in general during the pandemic and reported paying off portions of their credit card debt with government stimulus money. The real anomaly is how much credit card debt fell during the pandemic, says Rossman.
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What Is The Average Us Credit Card Debt By Income And Age
According to data from CreditDonkey.com, the average individual credit card debt stands at $5,331. Additionally, every month, most Americans don’t pay their credit card balance in full – 55% don’t regularly pay in full.
What Is the Average Credit Card Debt in the U.S?
Here’s a closer look at how credit card debt stacks up demographically across the U.S. .
Average Credit Card Debt by Age
First up is the average credit card debt by age. Notice how plastic-related debt starts low and moves up, and tops out, and 45 to 54 years. Those are peak earning years for credit card consumers, and they can better afford the higher level of debt.
Credit card debt then slows down as Americans shift into retirement mode, with average debt declining from $9,096 at ages 45 to 54 to $5,638 at age 75 and over. At that point, retired Americans are living in fixed income mode, and spend significantly less using their credit cards.
Average Credit Card Debt by Age
Average Credit Card Debt by Income
As you’ll notice, credit card debt has everything to do with income – the more money you have, the higher your credit card debt.
This is hardly a surprise, but what does raise an eyebrow is the ratio of credit card debt to income at the lower annual income levels. It’s tougher to live within a household budget when you only earn $24,999 per year but hold $3,000 in credit card data at the same time.
What to Know About Credit Card Debt
Average Credit Card Debt by Income
Other American Credit Card Debt Statistics You Should Know
37. Outstanding , with over $73 billion in balances paid off in 2020 in spite of the recession.
38. More than 90% of Americans own a credit card.
39. Credit card interest charges stood at 20.09% in 2020.
40. US households that have credit card debt are expected to pay around $1,250,000 in interest charges.
41. The average amount of credit card debt in America went up in 2019, along with the credit score from 701 to 703.
42. Self-employed US residents will have to pay $1,539 on average in credit card interest.
43. 61% of Americans had at least one credit card in 2020, while the average consumer had four.
44. The average US FICO score is 703.4.
45. According to college students credit card debt statistics, one in four college students leaves college with more than $5,000 in credit card debt.
46. 75% of them transfer their outstanding balance from month to month.
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Create A Debt Payoff Plan
Once you update your budget and make any necessary changes, you may be ready to create a payoff plan for your credit card debt. Having a plan can help you stay motivated and can keep your sights set on the end goal of debt freedom.
There are several popular debt elimination options to consider, including the debt snowball and the debt avalanche methods. Both approaches have their pros and cons so you may want to review both options. Take a look at the research to determine which debt payoff plan is the best fit for your situation.
Average Credit Card Debt Statistics Editors Choice
- The average household credit card debt in the US peaked at $7,027.
- A regular US family has accrued a $190,595 mortgage debt.
- Around 6 out of 10 Americans have a FICO score of at least 700.
- from the previous quarter.
- 45.4% of US families are burdened with some type of credit card debt.
- On average, women have 4.5 active credit cards while men have 3.6.
- There are 511.4 million credit cards in circulation in the US.
- The average credit card borrower in Alaska carries the highest credit card debt hitting $6,617.
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Average Credit Card Debt By Age
tends to vary by age. MoneyGeeks analysis of data from the Federal Reserves 2019 Survey of Consumer Finances found that, on average, older adults have more credit card debt than younger adults.
Data showed that people 35 or younger have the lowest average credit card debt at $3,700. Around 48% of individuals in this age group carry debt.
Adults 75 or older have the highest average credit card debt at $8,100, but just 28% of people in this age group have debt.
Meanwhile, 52% of Americans 4554 years old have credit card debt, making them the age group most likely to carry it. The average credit card debt for this age group is $7,700.
Average Credit Card Debt by Age
Average Credit Card Debt By Gender
20. Average credit card debt in America that burdens men makes up 38%, less than half of the percentage of women burdened with credit card debt.
21. 97 million women and 95 million men own at least one credit card.
22. On average, women have 4.5 active credit cards while men have 3.6.
23. As much as 61% of women are very confident about having their credit card application approved. 56% of men feel the same way.
24. Women aged 55 to 64 are twice as much indebted as men are .
25. 60% of women carry their outstanding balance from one month to another, which is 5% less than the men.
26. Approximately two-thirds of both men and women only take care of the monthly mandatory minimum payment.
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Average Credit Card Debt By Level Of Education
Average credit card debt is higher for Americans with higher levels of education.
College graduates have the highest average credit card debt at $7,940. On the other hand, those with no high school diploma have $3,390 in average credit card debt.
The most reasonable explanation for this is each group’s respective income. Median income increases at each level of education. As an example, Americans with a bachelor’s degree earn over twice as much as Americans with no high school diploma. Higher income, as we saw earlier, corresponds to higher credit card debt.
Interest income makes up a significant chunk of credit card company earnings. It was 43% of the $176 billion credit card companies made in 2020.
Credit Card Debt Statistics
Thats Americans total credit card balance, according to the latest consumer debt data from the Federal Reserve Bank of New York.
The latest Fed data shows that consumer credit card balances rose to $856 billion in the fourth quarter of 2021. Thats a stunning $52 billion increase from $804 billion in the third quarter of 2021.
It is the biggest quarterly increase in the 22-year history of the report and is the third straight quarterly increase but only the third jump weve seen since the start of 2020.
Even with the huge increase, Americans credit card debt is $71 billion below the record set in the fourth quarter of 2019 when balances stood at $927 billion. Credit card debt in America is still high by historical standards, however. It is also light years beyond the $478 billion that we saw 21 years ago in the first quarter of 1999.
Card debt showed hockey-stick growth until the financial collapse in 2008, when balances fell from $866 billion back in the fourth quarter of 2008 to $660 billion in the first quarter of 2013. But, as you can see in the chart below, the hockey stick returned.
Then, when the pandemic took hold in 2020 plunged again, falling from $927 billion in Q4 2019 to $770 billion in Q1 of 2021. But as you can see in the chart below, the hockey stick has returned, thanks to an unprecedented spike in the Q4 2021.
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How Can I Start Paying Off My Debt
Many people carry a car loan, mortgage, or some other type of financial aid throughout their lives. But you can speed up the repayment process with some careful planning. Heres how you can get started paying down your personal debt.
1. Make a list of outstanding debts
To pay down debt, it helps to know how much money you currently owe. You can start by making a list of all your debts. Be sure to include loans, credit card balances, and any money you owe to family and friends.
As you write down each debt, include the most important details: the total outstanding balance, the interest rate, and the minimum monthly payment.
What is an interest rate?
The interest rate is the cost you pay each year to borrow money expressed as a percentage. This is in addition to paying back the original loan amount.
Just having this information written down can make you feel more in control of your finances. Now that you know exactly where you stand, youre ready to create a personalized debt payment plan.
2. Choose a debt payment method
Paying down your debt is much easier when you have a plan. A debt payment plan can motivate you to pay off your debt faster and more strategically.
Here are two popular payment methods to consider.
3. Make your debt more affordable
When you have debt, you pay interest on every dollar you owe. The higher your interest rates are, the more money you have to pay.
How To Deal With Too Much Debt
Between the warning signs and the debt-income-ratio, hopefully youll come up with an answer to the question of how much debt is too much debt for you.
If your DTI is below 35% and no red warning flags are waving, congratulations! But if you determine your debt is too much, it raises an even more important question: What are you going to do about it?
The simple solution is to make more money, cut expenses or both. It takes dedication and a display of personal responsibility, but it also takes a plan.
Write down all your expenses and see where you can cut back. The devilish thing about unsecured debt is that the less you pay on those bills each month, the more youll eventually pay in interest charges.
One way to combat that is to get the lowest interest rate possible. A lot of consumers have turned to debt management programs, where a credit counselor helps you consolidate payments and lower interest rates on credit cards.
The counselor also helps you design a budget that with expenses you can afford and simultaneously helps get rid of your debt.
The Great American Debt Mountain isnt getting any smaller, but theres no law saying you have to help it grow.
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How To Tackle Credit Card Debt Head
Americans are making strides to achieve better credit. The average balance dropped 14% in 2020. FICO scores are up too: The average hit a record 710 last year, and members of most generations saw a bump.
That’s great news, Rossman says, “since we’re 18 months into an unprecedented pandemic and we endured a sharp, albeit short, recession with a huge spike in unemployment.”
A great way to tackle debt is head-on, as long as you have the right tools at your disposal. Experts suggest exploring the possibility of getting a balance transfer card, for example, which allows you to transfer debt from a high-interest card to one that offers no interest from anywhere between a year to 20 months.
Be sure you can pay off the debt before the 0% interest introductory period ends, warns Kim Hardy, CPA/CFF, member of the American Institute of CPAs’ Financial Literacy Commission. And watch your spending: “Many of the balance transfer cards also come with the zero APR for purchases, so a lot of people find themselves in more debt than in the beginning, because you’re continuing to purchase new items,” she previously told Grow.
The biggest step is making a financial plan. “If you can’t pay it off within that time, definitely make sure that the interest rate after that introductory period is still saving you money compared to your current interest rate,” she added. “The biggest thing is having a plan and making sure you can pay off the debt.”
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