As of late 2023, American households carried a total of $17.503 trillion of debt, averaging $104,215 per household.
This analysis from The Motley Fool Ascent provides a thorough overview of American households’ financial responsibilities by slicing through supply chain problems and the economic fallout from inflation.
Drawing on data from Experian, the Federal Reserve, TransUnion, and the U. S. Census Bureau, we break down the most prevalent debt categories, such as credit card debt, mortgages, auto loans, and personal loans.
In today’s financially complex world, credit cards have become an indispensable tool for millions of families. While they offer convenience and rewards, managing credit card debt can be a daunting task. This guide delves into the intricacies of average family credit card debt, providing insights into the national landscape and offering practical tips for responsible credit card usage.
The National Picture: A Snapshot of Average Family Credit Card Debt
According to a recent NerdWallet study, the average American household carries a credit card debt of $6,501 This figure represents a significant portion of the overall household debt, which stands at a staggering $17503 trillion. While the average debt may seem manageable, it’s crucial to remember that this is just an average. The reality is that credit card debt varies widely across different states, income levels, and age groups.
State-by-State Breakdown: Where Does Your State Stand?
The NerdWallet study reveals interesting variations in average credit card debt across different states. For instance, residents of Alaska carry the highest average debt of $8,857, while those in Mississippi have the lowest average debt of $4,421. This disparity highlights the importance of considering local factors when analyzing credit card debt trends.
Income and Age: Unraveling the Correlation
Income and age play a significant role in determining credit card debt levels. Higher income families typically have larger credit card balances, and younger generations are more likely than older generations to be in debt on their credit cards. This correlation highlights how important it is for people of all ages and income levels to be financially literate and practice responsible credit card management.
Breaking Down the Numbers: A Deeper Dive into Credit Card Debt
To gain a deeper understanding of credit card debt, let’s delve into some key statistics:
- Total credit card debt in the U.S.: $1.129 trillion (as of Q4 2023)
- Average credit card balance: $5,910 (as of 2022)
- Credit card delinquency rate: 2.98% (as of Q3 2023)
- Average credit card interest rate: 16.43% (as of April 2024)
These numbers demonstrate the frequency of credit card debt and its possible repercussions. It’s clear that millions of Americans are finding it difficult to keep track of their credit card debt, which could result in exorbitant interest costs and harm to their credit ratings.
Navigating the Maze: Tips for Managing Credit Card Debt
Managing credit card debt effectively requires a multi-pronged approach. The following useful advice will assist you in keeping track of your credit card balances:
- Track your spending: Keeping a close eye on your expenses is crucial for identifying areas where you can cut back. Utilize budgeting apps or spreadsheets to monitor your spending patterns.
- Pay more than the minimum: While the minimum payment may seem manageable, it will take you years to pay off your debt and accrue significant interest charges. Aim to pay more than the minimum whenever possible.
- Consider a balance transfer: If you have high-interest credit card debt, transferring it to a card with a lower interest rate can save you money on interest charges. However, be mindful of balance transfer fees and ensure you can pay off the debt within the promotional period.
- Explore debt consolidation: Consolidating your credit card debt into a personal loan with a lower interest rate can simplify your repayment process and potentially reduce your overall interest payments.
- Seek professional help: If you’re struggling to manage your credit card debt on your own, consider seeking professional help from a credit counselor or financial advisor. They can provide personalized guidance and develop a debt repayment plan tailored to your specific circumstances.
The Bottom Line: Responsible Credit Card Usage for Financial Well-being
While credit cards can be useful tools for budgeting and credit building, it’s important to use them responsibly. Families can take advantage of credit cards while protecting their financial stability by knowing the average amount of credit card debt, seeing possible hazards, and putting good debt management techniques into place. In order to successfully navigate the complicated world of personal finance and achieve long-term financial stability, keep in mind that financial literacy and responsible credit card usage are essential.
Delinquent credit card payments: 98%
Americans remained surprisingly steady in paying their credit card bills on time. The percentage of commercial bank credit card loans that were delinquent (at least 30 days past due) in the third quarter of 2023 was 2. 98%, according to the Federal Reserve. Thats up from 2. 77% in the previous quarter.
The commercial bank credit card loan delinquency rate has gradually increased after reaching a record low in the third quarter of 2021, but it is still far below levels seen over the previous 30 years.
In the third quarter of 2023, 6. 36% of the previously existing, non-seriously delinquent credit card debt became delinquent by 90% days or longer, a condition known as severe delinquency. Thats a significant jump from 5. 78% in the previous quarter and 4. 01% in the fourth quarter of 2022.
Costly auto payments and other loans coming due contributed to the rise in serious delinquencies, which was primarily the fault of millennials, low-income borrowers, and to a lesser extent, Gen Z.
Average personal loan debt in 2023: $11,925
| FIGURE | AMOUNT | Previous year |
|---|---|---|
| Average unsecured personal loan amount, October 2023 | $7,608 | $7,934 |
| Average unsecured personal loan balance per consumer, December 2023 | $11,925 | $11,241 |
| Average finance rate on 24-month personal loans from commercial banks, January 2024 | 12.35% | 11.48% |
| Personal loans in hardship, December 2023 | 3.40% | 3.70% |
Personal loans are versatile financial products. They can be used for a variety of financial needs, including weddings, renovations, vacations, or debt consolidation.
TransUnion reports that in October 2023, the average amount of an unsecured personal loan was $7,608, a decrease from $7,934 in the same month in 2022.
However, as of December 2023, the average balance per customer was $11,925, suggesting that many individuals with one unsecured personal loan also had at least one additional one. Thats higher than the level recorded per consumer in December 2022, which was $11,241.
US household and credit card debt climbs to record high | GMA
FAQ
How much credit card debt is the average family in?
|
Generation
|
Average Credit Card Debt
|
|
Millennials
|
$6,521
|
|
Generation X
|
$9,123
|
|
Baby boomers
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$6,642
|
|
Silent generation
|
$3,412
|
Is $2,000 a lot of credit card debt?
What is the average middle class credit card debt?
What is considered high credit card debt?
How much credit card debt does the average American household have?
The average American household has about $8,590 in credit card debt, based on the most recent U.S. credit card debt and household data.
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.
How much credit card interest does a household pay a year?
The average amount of credit card interest paid by households is up due to recent Federal Reserve rate hikes and rising amounts of revolving credit card debt. U.S. households that carry credit card debt will pay an average of $1,380 in interest this year . And that’s assuming interest rates don’t go higher.
How much credit card debt does a white person have?
White Americans have average credit card debt of $6,930 and a median credit card balance of $3,000, the most of any racial identity/ethnicity. Hispanic Americans have the lowest average credit card debt at $4,150, and with Black Americans, the lowest median credit card debt at $1,700. Data source: Federal Reserve Survey of Consumer Finances (2023).