How much does the average American owe in credit card debt?
The average American household owes $7,951 in credit card debt a year, according to 2022 data from the Federal Reserve Bank of New York and the U.S. Census Bureau.
Credit card debt in America by the numbers
That represents a 4.6% increase in a single quarter, with cardholders shouldering thirteen-figure debt at $1.03 trillion for the first time. In short, that amounts to an average balance of $5,733 per cardholder.
According to Experian, average total consumer household debt in 2023 is $104,215. That's up 11% from 2020, when average total consumer debt was $92,727.
$5,000 in credit card debt can be quite costly in the long run. That's especially the case if you only make minimum payments each month. However, you don't have to accept decades of credit card debt.
Anything over 30% credit utilization will decrease your credit score. So, you can use this as a measure of when you have too much debt. Consolidated Credit offers a free credit card debt worksheet that makes it easy to total up your current balances and total credit limit.
Running up $50,000 in credit card debt is not impossible. About two million Americans do it every year. Paying off that bill? Well, that's not impossible either, though it is considerably less fun.
Having any credit card debt can be stressful, but $10,000 in credit card debt is a different level of stress. The average credit card interest rate is over 20%, so interest charges alone will take up a large chunk of your payments. On $10,000 in balances, you could end up paying over $2,000 per year in interest.
Around 23% of Americans are debt free, according to the most recent data available from the Federal Reserve. That figure factors in every type of debt, from credit card balances and student loans to mortgages, car loans and more.
Total Balance (2023, Q4)
Mortgage debt is most Americans' largest debt, exceeding other types by a wide margin.
Debt-to-income ratio is your monthly debt obligations compared to your gross monthly income (before taxes), expressed as a percentage. A good debt-to-income ratio is less than or equal to 36%. Any debt-to-income ratio above 43% is considered to be too much debt.
How long will it take to pay off $20000 in credit card debt?
It will take 47 months to pay off $20,000 with payments of $600 per month, assuming the average credit card APR of around 18%. The time it takes to repay a balance depends on how often you make payments, how big your payments are and what the interest rate charged by the lender is.
One in five (22%) have at least $10,000 to $20,000 worth of credit card debt. Of those, just over 5% have more than $30,000.
However, multiple accounts may be difficult to track, resulting in missed payments that lower your credit score. You must decide what you can manage and what will make you appear most desirable. Having too many cards with a zero balance will not improve your credit score. In fact, it can actually hurt it.
The age group with the highest average credit card debt
Americans who are 75 and older have the highest average credit card debt, according to the Survey of Consumer Finances (SCF) by the Federal Reserve Board.
Generation | Average credit card debt |
---|---|
Generation Z | $3,148 |
Millennials | $6,274 |
Generation X | $8,870 |
Baby boomers | $6,601 |
It will take 41 months to pay off $30,000 with payments of $1,000 per month, assuming the average credit card APR of around 18%. The time it takes to repay a balance depends on how often you make payments, how big your payments are and what the interest rate charged by the lender is.
What percentage of America is debt-free? According to that same Experian study, less than 25% of American households are debt-free. This figure may be small for a variety of reasons, particularly because of the high number of home mortgages and auto loans many Americans have.
The average FICO credit score in the US is 718, according to the latest FICO data from April 2023. The average VantageScore is 701 as of January 2024. Credit scores, which are like a grade for your borrowing history, fall in the range of 300 to 850.
On average, men have more debt than women across all categories, except for student loans. While there isn't much data yet, early studies have shown that nonbinary students undergo more financial strain than their cisgender peers, and are more likely to have student loan debt.
- Using a balance transfer credit card. ...
- Consolidating debt with a personal loan. ...
- Borrowing money from family or friends. ...
- Paying off high-interest debt first. ...
- Paying off the smallest balance first. ...
- Bottom line.
How long will it take to pay off $10000 credit card?
Here's a breakdown of how long it would take to pay off $10,000 making minimum payments at different interest rates: At 15% interest – 26 years, 3 months. At 20% interest – 28 years, 6 months. At 25% interest – 30 years, 3 months.
- Tip #1: Don't wait. ...
- Tip #2: Pay close attention to your budget. ...
- Tip #3: Increase your income. ...
- Tip #4: Start an emergency fund – even if it's just pennies. ...
- Tip #5: Be patient.
How Many Americans Are Living Paycheck to Paycheck? A 2023 survey conducted by Payroll.org highlighted that 78% of Americans live paycheck to paycheck, a 6% increase from the previous year. In other words, more than three-quarters of Americans struggle to save or invest after paying for their monthly expenses.
Living on credit cards can't last forever, because eventually you'll reach the end of your credit line. Consider it a stop-gap measure, not a permanent plan. “In a lot of cases, you won't know how long your emergency will last,” says Nitzsche. “It could be a few months, it could be a year.
The Standard Route is what credit companies and lenders recommend. If this is the graduate's choice, he or she will be debt free around the age of 58. It will take a total of 36 years to complete. It's a whole lot of time but it's the standard for a lot of people.
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