Sunday, February 5, 2023

What Is The Average Credit Card Debt In America

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Whats The Average Interest Rate On Peoples Credit Cards What About Those Who Carry A Balance What About New Credit Card Offers

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

For all credit cards, the average APR was 14.51% in the fourth quarter of 2021.

For cards that are accruing interest, the average in Q4 2021 was 16.44%.

For new credit card offers, the average today is 19.62%.

The average interest rate for current credit card accounts and new card offers
Average APR for new credit card offers 19.62%

Of course, your best move is to make those interest rates a moot point by paying your card debt in full, but thats often easier said than done.

Get A Side Hustle Or Sell Your Stuff

If you have bad credit and cant get a balance transfer card or a personal loan, bringing in extra cash may be the way to go. One option is to get a side gig that fits your schedule. You could get a part-time job, become a freelance writer or offer a service like walking dogs or mowing lawns.

Another possibility: sell electronics, furniture, unused exercise equipment or other valuable items that are collecting dust around your home.

Finally, you may be able to borrow money from a friend or family member. Raising extra money is one of the best ways to get out of debt because you can chip away at your principal and reduce the amount of interest you pay overall.

Ways To Lower Your Credit Card Debt In 2021

As you review the figures above, it can help you understand how the amount of credit card debt you carry measures up to other consumers. Yet even if you owe less than the national credit card debt average of $5,313, that doesnt mean you should relax. If the credit card balance you carry over is above $0, you probably have work to do.

Saving money and potentially improving your credit rating are two great reasons to pay down your credit card debt. Ready to get started? Here are five debt elimination strategies that might help you lower your credit card debt this year.

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Which States Have The Most Credit Card Debt

Overall, the national average card debt among cardholders with unpaid balances was $6,569. That includes debt from both bank cards and retail credit cards.

The four states with the most debt were all on the East Coast, while the three lowest were found in the Deep South. There was a major difference in balances between the states at the top and bottom of our state debt ranking, with New Jersey cardholders owing $7,872 and Kentuckys owing $5,441. That means the average New Jersey balance is 45% higher than the average balance in Kentucky.

LendingTree also recently published reports that take a deep dive into average credit card debt by state for California, Texas, Florida and Washington, D.C. The reports include a statewide look at credit card balances, as well as a breakdown of card debt, utilization rates and other key data points in the 10 biggest metropolitan areas in those states. Well be launching similar reports on other states in the near future.

Consolidate With A Personal Loan

4 Keys to Getting Out of Debt

In some cases, a credit card balance transfer simply doesnt cut it. Depending on the amount of credit card debt you need to repay, for example, you may not be able to find a balance transfer credit card with a large enough credit line available for transfers, regardless of your credit score. When a balance transfer isnt an effective or efficient option, a credit card consolidation loan may be the best bet.

Essentially, credit card consolidation involves taking out a personal installment loan and using those funds to pay off your credit card balance. Ideally, the loan you use will have a much lower APR than charged by any of your current credit cards, making your debt more affordable to repay. These days, you can easily compare quotes from multiple lenders through online lending networks, like our expert picks below.

When exploring your options for consolidation loans, be sure to investigate all aspects of the loan rather than simply focusing on the size of your monthly payment. The total length of your loan, for instance, can have a big impact on both your monthly payment and the total cost of your loan because the longer your loan extends, the more interest fees youll end up paying over the life of that loan.

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Get Help With Credit Card Debt

The first place to turn for help, should you need professional assistance, should NOT be your sister-in-law who took a finance class in college on her way to a business degree. That does not qualify her as a financial professional. Start with a nonprofit credit counseling agency like Money Fit that offers a debt management program .

Through their DMP, a credit counseling agency will work with your current creditors to have them lower your interest rates and waive your late fees, leading to lower monthly payments and a Debt Freedom Day just five years or less away.

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.

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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.

Many Relied On Credit Cards During The Pandemic

Avoid debt and common credit card mistakes

Despite data from the Federal Reserve Bank of St. Louis showing an overall increase in credit card interest rates, the average annual amount of credit card interest paid by households carrying balances dropped slightly this year from $1,155 in 2020 to $1,029 in 2021 because of an overall reduction in household revolving credit card debt. But not every cardholder saw their debt decrease. According to NerdWallets survey, some Americans leaned on their credit cards to get through the pandemic.

One in 5 Americans report increasing their overall credit card debt during the pandemic. Additionally, 18% of Americans say they relied on credit cards to pay for necessities during the pandemic and 17% say the same thing about paying for emergencies.

Under normal circumstances, it goes against most financial advice to carry a credit card balance or rely on credit cards to cover emergencies. But the last two years have been anything but normal. One of the benefits of establishing good credit is being able to lean on it in tough times, and for many, credit cards may have been the thing that kept food on the table and the lights on. And thats completely OK.

If your financial situation has stabilized, a great 2022 goal would be to pay down debt and build up savings. If thats not a possibility for you yet, its OK to spend the year recovering and setting more modest goals.

Sara Rathner, NerdWallet’s Credit Cards Expert

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Total Outstanding Credit Card Debt

As more Americans get vaccinated and more states open, credit card debt is ticking back up a bit. Americansoutstanding revolving debt, most of which is credit card debt, reached $998.4 billion2 in July 2021, according to data from the Federal Reserve.

Thats an increase from a low of $974.6 billion2 in the fourth quarter of 2020 after the amount of revolving debt owed by U.S. consumers fell throughout the year.

You Make Only The Minimum Payments

What many people dont realize about revolving credit card bills is that making only the minimum payment-or less will mean taking 12 to 15 years to pay it off. Making only the minimum payment means you are not applying any significant amount toward the principal. If youre making only the minimum payments on your credit cards every month, you may be overextended and in need of putting together a spending plan.

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How To Deal With Too Much Credit Card Debt

Ask for a lower interest rate. Many credit card companies will cut you a break, especially if you threaten to transfer the balance to a competing card with a lower rate.

Use cash. Peeling off six $20 bills for those sneakers is a lot harder than simply slapping down a piece of plastic and saying, Charge it.

Consolidate your cards. Instead of paying varying interest rates, find the lowest one and put all your debt on that one. The danger is the low introductory rate on transfers usually last about a year, then high interest rates kick in.

A better option is to consider a debt management program, where your bills are combined into one monthly payment that is a fixed rate. A nonprofit credit counseling agency like InCharge Debt Solutions has counselors who will contact your creditors and request participation in the plan on your behalf. Your creditors may agree to lower interest rates and possibly waive late fees or over-the-limit fees, saving you a lot of money.

The Pandemic Impact On Debt

Credit card debt makes up for lack of income growth: Credit card debt ...

The less your income, the easier it is to pile up debt. That obvious lesson hit home in 2020.

The unemployment rate went from 3.5% pre-COVID to a peak of 14.8% in April 2020the highest level since 1948.

The total U.S. consumer debt balance grew $800 billion, according to Experian. That was an increase of 6% over 2019, the highest annual growth jump in over a decade.

Student loan debt increased the most , followed by mortgage debt and personal loan debt .

But dropped $73 billion, a 9% decrease from 2019 and the first annual drop in eight years.

A November 2020 Experian survey showed that 66% of consumers were spending the same or less during the pandemic than they had in 2019. About 33% of those surveyed said they put more in savings in 2020 than they did in the last year.

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Average American Debt By Age

Youve probably heard the saying You have to spend money to make money. Economists debate that, but theres little doubt that people spend more when theyre making more.

The average American has $90,460 in debt, according to a 2021 CNBC report. That included all types of consumer debt products, from credit cards to personal loans, mortgages and student debt.

The average amount of debt by generation in 2020:

  • Gen Z : $16,043
  • Millennials : $87,448
  • Gen X : $140,643
  • Baby boomers : $97,290
  • Silent generation : $41,281

You Use Balance Transfers

Many creditors offer new credit cards with balance transfers available at low interest rates for an introductory period. Its important to remember, though, that after the introductory period the interest rates typically skyrocket to 18% or more. Additionally, credit card companies are charging fees for transferring balances. If you keep switching credit card balances, you may have a problem managing your finances.

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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.

Financial Situation Changes Over The Past Year By Household Income

Average Debt By Age | Average Debt In America
32% 26%

Aside from an overall decrease in household income and an overall increase in expenses, some of the top reasons why some Americans finances have gotten worse are a specific, unexpected large expense and job loss .

Meanwhile, Americans whose household finances have gotten better over the past 12 months report opposite experiences. More than half of those with better finances say its because their household income increased overall, and 24% say its because their household expenses decreased.

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Student Loan Debt: Have You Borrowed Too Much

If cars and houses give you sticker shock, you might need hospitalization when you look at what a college education costs.

The average annual tuition for in-state residents at public colleges for the 2020-21 school year was $11,171. Want to go to an out-of-state public university? The average is $26,809. Private colleges are even more: $41,411 is the average cost per year.

Its even pricier at top-notch schools. Stanford, which charged no tuition from its opening in 1891 until 1920, now cost $55,473 a year regardless of where the student is from. Student loan delinquency those who were 90 days or more late on payments in 2021 was a low 6.2%, but that is skewed by CARES Act forbearance during the pandemic. Before the pandemic, millions had not made a payment on more than $150 billion in federal student loans for at least nine months, according to the Consumer Federation of America. The total defaults were 14% higher than 2015.

What Does The Average Us Credit Card Look Like

The average credit card interest rate sits below 15%

  • The average commercial bank interest rate is 14.56%.
  • This rate is 2.69% more than what they were at their lowest in August 2014: 11.82%.
  • Most credit cards feature some form of fees

  • The average annual fee for a credit card is $143.66% of credit cards dont charge an annual fee.
  • The average late payment fee charged on credit cards is $4.
  • Just 25% of credit cards offer some form of limited-time 0% introductory rate.
  • Late payments can last up to 7 years on a credit report from the date of delinquency.
  • U.S. consumer credit scores have grown since the pandemic

  • The average credit score in the United States is 710.
  • The percentage of U.S. consumers with an excellent credit score is 20.7%.
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    How To Reduce Credit Card Debt

    You can reduce and prevent credit card debt with the following strategies:

    • Request a lower rate. Call your credit card company and ask for a lower card interest rate. Cite your customer loyalty and any lenders that offer lower credit card interest rates.
    • Increase your income. Whether taking on overtime, getting a second job or asking for a raise, there are a number of ways to increase your income. You could even make money from a hobby, selling something you make or using a specialized skill to teach lessons. With that coverage, you could pay down your debt faster.
    • Pay more than the minimum. If you can afford to pay more than your minimum payment every month, doing so will help you pay the debt off faster. Every little bit helps!
    • Cut back on spending. You can reduce spending in many ways use our calculator to see how much you could save.
    • Consolidate debt. A balance transfer credit card lets you move credit card balances to a lower-interest card. This is a great way to take advantage of a lower interest rate from other issuers. Additionally, debt consolidation can make it simpler to repay your debt by reducing the number of monthly payments.

    Average Credit Card Debt Statistics

    Average Credit Card Debt in America

    Numerous American households are burdened with credit card debt. That comes as no surprise as the cost for many necessities cant be covered with one or more monthly salaries.

    1. In August 2020, the average percentage rate on credit card accounts accruing interests amounted to 16.43%.

    2. According to credit card debt statistics, an average of $1,539 in annual credit card interest will fall upon self-employed American residents.

    3. Households with the lowest net worth have an average of $4,830 in credit card debt.

    4. US households that carry credit card debt are liable to paying average interest charges of up to $1,155.

    5. Credit debt statistics show that 45.4% of US families are burdened with some type of credit card debt.

    6. The average is around $5,315, down from $6,194 since last year.

    Heres a breakdown of the average household debt:

    7. 70% of adults have accrued personal debt, of which 39% have a credit card debt, 25% a mortgage debt, 23% a car loan debt, and 16% a student loan debt.

    8. The average household credit card debt owed by an average US household amounts to $6,270, whereas the total consumer debt spikes to $14.56 trillion.

    The total debt includes any kind of debt ranging from mortgages, credit lines, student loans, auto loans, fast loans, and other household debt.

    9. A regular US family has accrued a $190,595 mortgage debt, and the total mortgage debt is $9.86 trillion.

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