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Across the country, many Americans are struggling with mounting credit card debt. The most recent data from the Federal Reserve reveals that credit card debt soared to $1. 13 trillion—yes, that’s trillion with a “t”— in Q4 2023. Comparing the record-high amount to the nation’s pre-pandemic credit card debt level of $927 billion, there has been a noticeable increase.
Yo money fam! Let’s talk about the elephant in the room: credit card debt. It’s a heavy topic but one we need to face head-on. Buckle up, because the numbers are staggering.
The typical American household was drowning in $8,834 in credit card debt in 2023. That’s a whopping 13% increase from 2022, according to Experian. Yikes!.
But wait, there’s more! That’s just the average. For some folks, the burden is even heavier. The top 20% of cardholders carry a whopping $22,495 in debt. That’s enough to buy a decent used car or a down payment on a house.
So, what’s the deal with this debt explosion? Well it’s a perfect storm of factors. The pandemic inflation, and rising interest rates have all played a part. Many people are struggling to make ends meet, and credit cards are often seen as a quick fix.
But here’s the thing: credit card debt is a slippery slope Those high interest rates can quickly turn a small balance into a mountain of debt. And before you know it, you’re stuck in a cycle of minimum payments and mounting interest charges
So, what can we do? First, let’s be honest with ourselves about our spending habits. Are we living beyond our means? Are we using credit cards for things we can’t afford? If so, it’s time to make some changes.
Here are a few tips to help you get out of credit card debt:
- Create a budget and stick to it. This will help you track your income and expenses, and make sure you’re not spending more than you earn.
- Pay more than the minimum payment. This will help you pay off your debt faster and save on interest charges.
- Transfer your balance to a 0% APR card. This can give you some breathing room to pay off your debt without accruing more interest.
- Consolidate your debt. This can help you simplify your payments and get a lower interest rate.
- Seek professional help. If you’re struggling to manage your debt on your own, there are credit counseling agencies that can help.
Getting out of credit card debt isn’t easy, but it’s definitely possible. You can take charge of your financial future and escape the bonds of debt with a little preparation and work.
Remember, you’re not alone in this. Millions of Americans are struggling with credit card debt. But there is hope. You can recover and reach your financial objectives by acting and making wise decisions.
Now, let’s dive deeper into the data and see how credit card debt varies across different demographics.
By state:
- The states with the highest average credit card debt are Alaska, Maryland, and Nevada.
- The states with the lowest average credit card debt are West Virginia, South Dakota, and Kentucky.
By age:
- Generation X has the highest average credit card balance, followed by Millennials and Baby Boomers.
- Generation Z has the lowest average credit card balance.
By income:
- Households with higher incomes tend to have higher credit card balances.
- Households with lower incomes tend to have lower credit card balances.
It’s important to remember that these are just averages. Your individual credit card debt will depend on your own spending habits and financial situation.
But the overall trend is clear: credit card debt is a major problem in America. It’s time for us to take action and find ways to get this debt under control.
So, what are you waiting for? Take charge of your finances today and start working towards a debt-free future. You’ve got this!
Tips For Handling Credit Card Debt
Credit cards can offer many valuable benefits when you use them in a responsible manner. These three pointers will help you manage your credit cards expertly so you can maximize your accounts’ benefits without incurring high interest costs or negatively impacting your credit score.
- Establish responsible spending habits. It’s crucial to use credit cards responsibly and only make purchases you can afford to pay off within a billing cycle. Revolving a balance from one month to the next will result in you having to pay your credit card issuer expensive interest charges (unless you’re taking advantage of a 200 percent annual percentage rate credit card offer). Your credit score may also be impacted by a high credit card utilization ratio. To prevent these problems, think about planning and monitoring your spending with a budgeting app. While you take advantage of the benefits, convenience, and rewards that credit cards provide, a basic budget can help you avoid going overboard.
- Schedule automatic payments. When it comes to credit cards, one of the biggest mistakes you can make is not paying your bills on time. But the majority of credit card issuers allow you to set up automatic payments, so you never have to be concerned about forgetting a payment date. As a precaution, you can set up autopay to cover at least the minimum amount owed. Additionally, if you feel comfortable doing so, you may be able to avoid paying interest on the account by setting up an automatic payment for the entire statement balance. (Tip: To be safe, always double-check the payment procedures each month—errors can occur.) ).
- Set up alerts. Setting up text and email alerts on your credit card account is another practical strategy to stay out of debt and safeguard yourself in other ways. You might be able to set up alerts with your card issuer to be notified when a big purchase happens, when your balance goes over a certain amount, or when your due date is coming up. These prompts may help you remember your spending objectives and handle any unauthorized credit card purchases that may arise.
Average Credit Card Debt by State
These were the states with the highest and lowest credit card balances as of January 2024, per TransUnion’s monthly credit snapshot report.
States With The Highest Average Credit Card Balances
| Rank | State | Average Credit Card Debt |
|---|---|---|
| 1 | Washington D.C. | $7,309 |
| 2 | Alaska | $7,302 |
| 3 | Hawaii | $7,203 |
| 4 | Maryland | $7,062 |
| 5 | Nevada | $6,919 |
States With The Lowest Average Credit Card Balances
| Rank | State | Average Credit Card Debt |
|---|---|---|
| 46 | West Virginia | $5,397 |
| 47 | South Dakota | $5,353 |
| 48 | Kentucky | $5,323 |
| 49 | Iowa | $5,129 |
| 50 | Wisconsin | $5,025 |
Americans Tell Us How Much Credit Card Debt They Have
FAQ
What is the average credit card debt in 2021?
|
Change in Average Credit Card Balances by Generation
|
|
|
|
|
2021
|
2022
|
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Millennials (27-42)
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$4,576
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$5,649
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|
Generation X (43-58)
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$7,070
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$8,134
|
|
Baby boomers (59-77)
|
$5,804
|
$6,245
|
How much credit card debt is the average American?
Is $2,000 a lot of credit card debt?
What is the average credit card debt held by Gen Z?
|
Generation
|
Average credit card debt
|
|
Baby boomers (58–76)
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$6,245
|
|
Generation X (42–57)
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$8,134
|
|
Millennials (26–41)
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$5,649
|
|
Generation Z (19–25)
|
$2,854
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How much credit card debt do Americans owe?
Average household debt: The average American household owes $10,848 in credit card debt. Average debt over time: The average American household’s credit card balance has increased by more than 78% since 1990, after adjusting for inflation.
What happened to the average credit card balance in 2021?
In 2021, the average credit card balance fell to $5,221, declining 1.8 percent from 2020’s average of $5,315, according to data from Experian. However, due to recent inflation and increased spending on credit cards, the average credit card debt surged to $5,910 in 2022.
How much credit card debt is there in 2022?
**The credit card debt figures in this chart represent revolving credit card balances — those that are carried from month to month — rather than all credit card balances. Total U.S. credit card outstanding debt stands at $1 trillion as of June 2022, which includes both revolving and transacting balances.
What is the average credit card balance?
The average credit card balance is $10,848 per household, as of Q4 2023. Adjusted for inflation, the average household’s balance is actually well below the record high of more than $12,000 at the end of 2008. Below, you can find additional data on average credit card debt levels over time.