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How Much Credit Card Debt Is There In The Us

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Sign Up For Credit Counseling

How Much Debt Is Too Much Debt | CNBC

Feel overwhelmed by your debt and not sure if any of the above solutions will work for you? A reputable nonprofit agency may be able to help. Most credit counseling agencies offer debt management plans . The agency may negotiate with the credit card companies on your behalf to lower both your interest rates and your monthly payments. You make one monthly payment to the agency, which distributes the funds to your creditors.

One caveat: if you sign up for a DMP, youll have to close the credit card accounts that are part of the plan. The downside: this reduces the amount of credit available to you, changing your and likely lowering your credit score. But getting out of debt will make your credit stronger in the future.

Types Of Debt In America

Consumer debt reached $14.56 trillion after the fourth quarter of 2020, according to the New York Federal Reserve.

The debt for Q4 was up $414 billion from the previous year and up nearly $1.9 trillion over the previous record high of $12.68 trillion in the third quarter of 2008.

There has been consistent growth in four main areas of debt home, auto, student loans and credit cards. Non-housing debt has risen faster, increasing 51% since 2013 compared with a 24% increase in mortgage debt.

Home Total mortgage debt rose to $10.4-trillion, an increase of $1 trillion from the same juncture in 2017.

But the increase is a good thing overall. The rise of mortgage debt is an indication of recovery in the housing market. Household debt has been growing for five years, but mortgage balance growth has been on a slower incline since it stopped declining in 2013.

Auto Total auto debt in Q4 of 2020 is $1.37 trillion, a jump of $100 billion from the same time in 2018.

When the Federal Reserve lowered interest rates in 2008 to fight the recession giving consumers more incentive to pursue the typical three-to-five year loan for autos it kick-started a trend that has held true today. Auto loans continue to increase because of low-interest rates.

Student Loans They continue to escalate, growing to a record $1.56 trillion in Q4 of 2020, up $100 billion from the same juncture in 2018. The average student debt in 2020 was $38,792.

Some Doing Better But More Struggling Financially Due To Covid

In talking about debt in 2020, its impossible to ignore how COVID-19 has affected Americans finances. When asked if their household financial situation had gotten better or worse since the onset of the pandemic, 14% of U.S. adults in the survey reported better, 42% say worse and 43% said their household finances stayed the same.

Of those Americans who say their household financial situation has gotten worse since the pandemic began, 51% say its because their household income decreased overall, 30% say its because they had an unexpected large expense and 22% attribute it to them losing their job, according to the survey.

Parents of children younger than 18, Latinos and Americans with household incomes of less than $50,000 have been hit particularly hard. Close to half of parents of minor children say their household financial situation has gotten worse since the onset of the pandemic of those people, more than 7 in 10 say its because their household income has decreased overall or theyve lost their job.

In the survey, Latinos are more likely to say their household financial situation has gotten worse than Black and white Americans . More than a quarter of Americans with household incomes under $50,000 say their household financial situation has gotten much worse since the onset of the pandemic .

To cope, some Americans have taken on debt credit card, medical or otherwise or withdrawn money from savings to pay for bills/necessities , the survey found.

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Check Your Credit Reports Regularly

You can typically check your credit reports for free, once a year. However, the three major credit reporting agencies Experian, TransUnion and Equifax are currently allowing consumers to check their reports weekly for free.

If you sign-up for a credit card relief package and are meeting the terms of that relief package, such as making a lower minimum payment, the company must report to the credit reporting agencies that you are current on the account. However, if you were already behind on your payments at the time you receive relief, the lender is not required to report that you are current.

And, if you find an error, you should work to dispute it, this is when it would be helpful to have a copy of the written agreement on hand.

How Many Americans Are Currently Delinquent With Their Credit Card Payments

How Much Do Americans Owe in Credit Card Debt?

Just 1.89% of credit card accounts are currently at least 30 days delinquent.

According to the most recent delinquency data from the Fed, the 30-day delinquency rate fell from 2.12% to 1.89% in the first quarter of 2021.

Thats a stunning number, marking the first time since the Fed began tracking these rates in 1991 that the rate has fallen below 2%. It is a huge difference from what we saw during the Great Recession, during which delinquencies peaked at nearly 7% in 2009.

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Leading Sources Of Debt

There are four primary sources of American debt: home mortgages, car loans, student loans, and credit card debt. Of that $14 trillion dollar debt we mentioned, a little more than $9 trillion can be credited to mortgages. Another $1.3 trillion comes from car loans, which have had low-interest rates since 2008.

Student loans account for a historic $1.48 trillion of American consumer debt. This means the average borrower owes about $35,000 in student loans. And finally, credit card debt accounts for the last $1 trillion of American debt, with the average consumer owing about $6,000 across four different credit cards.

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Throughout The Pandemic Credit

Consumer spending rose by 11.8% last quarter.

Throughout the pandemic, as millions of Americans were unemployed and struggling to put food on tables, credit-card debt declined.

But that has now changed.

In the second quarter of 2021, credit-card debt increased by $17 billion quarter on quarter to $790 billion, according to New York Federal Reserve data published on Tuesday. Still, it has not yet reached pre-pandemic levels.

Adjusting for inflation using the fourth quarter of 2019 as a base tells a different story: credit-card debt by nearly $3 billion from the first quarter of this year to the second, MarketWatch calculations show.

This suggests that consumers are still wary of taking on more credit-card debt.

To put the latest figures in context: In the last quarter of 2019, U.S. credit card debt was $930 billion, according to data from the New York Federal Reserves Quarterly Report on Household Debt and Credit.

In the second quarter of 2021, credit-card debt increased by $17 billion quarter on quarter to $790 billion.

Stimulus checks, enhanced unemployment benefits, mortgage forbearance and the student-loan relief allowed many Americans to pay down credit-card debt theyd been accumulating for years.

Last year, consumers on average cut their credit-card debt by 14%, according to Experian data. This helped contribute to a 3.5 percentage-point drop in credit-utilization rates from 2019 to 2020.

In fact, JPMorgan Chase JPM,

Is There A Correlation Between Credit Card Debt And Household Income

Rep. Casten: There is a huge problem in this country with consumer debt

You might assume that people who make less money rely on credit cards more, especially since research shows 68% of consumers use credit cards to buy everyday items. It stands to reason that households with less cash on hand might turn to credit cards to purchase things like groceries and gas.

However, our research shows the opposite. States with higher household incomes tend to have higher credit card debt. Maryland has the highest average household income at $80,776. Consumers in this state carry the fourth-highest credit card debt in the U.S.

Its a similar story in Alaska. Alaska has one of the highest median household income rates at $73,181 and consumers in this state have the highest credit card debt, sitting at $10,685.

Why are higher-income residents relying on credit cards? People in higher-income states might make more, but the cost of living is likely higher as well. As a result, many consumers rely on credit cards to balance their finances.

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Average Credit Card Debt In The United States

According to Experian, the average credit card balance in the United States reached $6,194 in the second quarter of 2019, the most recent period for which data is available.

However, the average doesn’t tell the whole story. Approximately 52% of Americans have credit card balances of $2,500 or less.

Alaskan consumers have the highest credit card debt, with an average of $8,026. New Jersey residents are second, with an average credit card balance of $7,084.

Iowa consumers have the lowest credit card debt, with an average balance of $4,744, followed by Wisconsin with an average of $4,908.

Percentage of U.S. credit card holders
$2,500 or less

Average Number Of Us Credit Cards Per Individual By Generation

Baby boomers have the most amount of credit cards per person, with Generation Z having the fewest. As baby boomers in their 40s and 50s, the economic prime of life, it makes sense that they would have the most amount of credit cards because they can pay them off with more ease than individuals in another generation.

Gen Z, on the other hand, has the lowest average credit cards per individual because they are the youngest generation. Right around the age of 18, they have little to no credit history or need for a credit card. In fact, many are not even old enough to get a credit card without their guardians signature. Some college students open a credit account to begin building their credit history.

Finally, the silent generation has, on average, a half less credit card than baby boomers. This shows that as people grow older, they may be more careful about using a credit card due have a fixed income. They also may have a great credit history and have cards with great interest rates and a lofty credit limit, so they wouldnt need as many. They may be more careful about using a credit card thus giving them less average revolving credit card debt than other generations.

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What Percent Of The Us Population Has A Credit Card

Data shows just how many people have credit cards, and more specifically how many Americans have credit cards. 70% of the United States population carries a credit card, with 34% of Americans carrying 3 or more cards. Most Americans carry multiple credit cards, most likely because it will raise credit limits as the funds are dispatched among multiple different outlets.

As The Average Credit Card Debt Grows So Does The Need For Relief

People in these 13 States Owe More than They Make a Year

April 24, 2012 by National Debt Relief

When you think about your credit card debt, what picture comes to mind? Do you see an 800-pound gorilla sitting on top of your head? Or is it a huge pile of bills that seems insurmountable? Maybe you see your debt like the ancient Greek king, Sisyphus, who was made to roll a huge boulder uphill every day only to see it roll back down. Whether you see your credit card debt as a gorilla or a colossal stone, youre not alone. The average credit card debt in America has become almost as immense as Sisyphuss boulder.

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Americans Have Almost $4 Trillion Of Card Credit

In a May 5 blog post, U.S. Consumer Debt Payments and Credit Buffers on the Eve of COVID-19, the New York Federal Reserve reported that U.S. consumers have about $3.93 trillion thats trillion with a t of total issued card credit.

Card credit refers to the maximum amount consumers potentially could borrow if they all maxed out their credit cards.

With about 331 million people in the U.S., $3.93 trillion of available card credit is equivalent to about $11,873 per person. Since the total population includes people who are too young to get credit or dont have any credit cards, the per-person average for those who have one or more cards is actually higher.

Learn What To Do If You Have Too Much Debt

The debt crisis in America has reached all new levels, and with the financial upheaval caused by COVID-19, the situation is unlikely to get better anytime soon. Understanding why so many of us are in debt can help us start to see the truth of our financial situation and figure out a way out of it. The key is to make and stick to a budget and avoid buying into the lie that we always need more stuff.

If youd like to discover the smartest way to pay off your debt, check out the rest of our site at DebtHunch. We find the best debt consolidation solutions for people just like you instantly. Check out your offers today and start making your way towards a debt-free life.

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Card Companies Pay $167 On Average Per Rewards Card Account

Rewards arent free for card issuers. In 2018, the average credit card company spent $167 per rewards account. That was up from $139 in 2015.

Part of the increase was due to premium cards with big signup bonuses, according to the Consumer Financial Protection Bureau report.

Rising costs for rewards may explain why card issuers have cut back some of the best rewards. Other perks, such as extended purchase returns, airline lost baggage protection, and auto rental insurance coverage, have seen declines as well.

Credit Cards Accounted For 23% Of Payments In 2018

What Is the Average Credit Card Debt in the US by Age

Cash is still a popular payment method, but cards have gained ground against paper money, especially for high-dollar transactions.

A representative sample of 2,873 consumers said they used credit cards for 23% of their transactions over staggered three-day periods in October 2018, according to the 2019 Diary of Consumer Payment Choice study conducted by the Federal Reserve. The proportion of card transactions was up 2% compared with 2017.

Consumers used credit for 23% of transactions in 2018, according to the Federal Reserve.

Cash was used for 26% of all transactions 49% of transactions of less than $10 and 42% of transactions of less than $25. Only 10% of payments of $25 or more were made in cash.

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Nearly Half Of Americans Need Credit Cards To Cover Essential Living Expenses

The Inside 1031 survey found that 49% of Americans depend on credit cards to cover essential living expenses. This is more common among younger generations: 61% of Gen Zers and 53% of millennials use credit cards for living expenses. Conversely, only 26% of boomers rely on credit cards to cover essential expenses.

Where Is Poverty Most Common In The Us

The face of poverty for most Americans is pictures of families in rundown housing in large cities where the industry has moved away.

The true face of poverty, however, is found in rural areas of the South and Southwest regions of the U.S. where living conditions are even more run down and industry never really started up.

Nine of the 10 states with the highest poverty rates in the U.S. are in the South. That includes Mississippi Louisiana , Arkansas , West Virginia , Kentucky , Alabama , South Carolina , Georgia and North Carolina lead the way.

The other is New Mexico .

These areas have a long history of poverty and there are many factors contributing to it, but the most obvious are that they were agricultural economies first and foremost with light emphasis on education and innovation.

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There Are Only 4 Major Brands Of Credit Cards

Although there are thousands of credit cards on the market, nearly all of them come from one of four card networks: Visa, Mastercard, Discover, and American Express .

Discover and Amex issue all of their own cards directly to consumers. Visa and Mastercard issue their cards through banks and credit unions.

Cards may also be co-branded by companies or organizations that market and distribute those cards and provide perks, rewards, or brand affinity warm-fuzzies to people who get those cards. Examples include airline, hotel, big box, and sports team-branded cards.

How To Get Out Of Credit Card Debt

How Our Country

There are two keys to getting out of credit card debt:

  • Avoid adding to it. That means only using your for essential expenses — if at all.
  • Pay off as much as possible every month. The more you pay, the faster you can pay off debt.
  • Start by adding up all your essential expenses. Compare that number to your income and decide exactly how much your monthly credit card debt payment will be. Then, make sure you pay that amount each month consistently. It could take time to pay off what you owe in full — that’s normal.

    For example: If you take home $1,500 per month and spend $1,200 on essentials, you’ll have $300 left for debt payments.

    Even if you only have $50 or less a month to put toward paying off your credit card debt, you’re making progress.

    There are also several tools that could potentially help you get out of credit card debt. Here’s what you may want to consider depending on your situation.

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