Understanding the Average Credit Card Debt in America

Credit card debt is a common financial reality for many households across the United States. In April 2019, data indicates that household debt was increasing at an annual rate of 5.2%. For credit cards specifically, understanding the broader landscape can provide perspective.

Key Credit Card Debt Statistics

To grasp the current situation, consider these facts from April 2019:

• **Average number of credit cards per person:** 3.1
• **Average credit card debt per person:** $6,354
• **Consumers with at least one credit card:** 169 million
• **Average percentage of household debt from credit cards:** 6%
• **Average interest rate on credit cards:** 15.09% APR
• **Highest average balance by generation:** Gen X ($7,750)

Who Carries Credit Card Debt?

Not all credit card users pay off their balances each month. Accounts can be categorized as 'transactors' who pay in full or 'revolvers' who carry a balance. Data from the American Bankers Association shows that approximately 44.4% of credit card accounts are revolvers, meaning nearly half of users carry a balance from month to month. Conversely, about 30.4% are transactors.

In April 2019, revolving credit in the U.S. surpassed $1 trillion, a notable increase from $888 billion in 2014. Although credit card balances saw a seasonal decline of $22 billion in the first quarter of 2019, the overall trend points to rising debt levels. This consistent high level of credit card debt could suggest consumer optimism about the economy, or it might signal financial strain for those who spend more than they earn monthly, as indicated by a Pew Charitable Trusts study showing only 46% of Americans earn more than they spend.

Furthermore, the Federal Reserve Bank of St. Louis reported an increase in credit card delinquencies, which could indicate growing challenges for consumers to meet their financial obligations.

The Impact of Interest on Credit Card Debt

The average interest rate on credit cards in April 2019 was 15.09% APR. For accounts that incurred interest (those not paid in full), the average rate at the end of Q1 2019 was 16.91% APR. With $1.1 trillion in outstanding credit card debt, this translates to Americans collectively paying approximately $186 billion in interest annually.

On an individual level, carrying the average credit card debt of $6,354 with a 16.91% APR could result in roughly $1,074 in interest over a year. Credit card interest rates are influenced by federal rates and have shown an upward trend, suggesting that carrying a balance is becoming more costly.

Income and Credit Card Debt Levels

There's a relationship between household income and the amount of credit card debt held. Generally, higher income households tend to have higher amounts of household debt, reflecting greater borrowing capacity. However, the manageability of this debt varies significantly with income.

For example, while someone earning $20,000 annually with $3,000 in credit card debt has 15% of their income tied to debt, an individual earning $70,000 with $5,800 in debt sees that as only 8.2% of their income. The absolute debt amount might be higher for wealthier individuals, but it typically represents a smaller, more manageable proportion of their income.

Here's a breakdown of average credit card debt by income bracket:

• **$24,999 or less:** $3,000
• **$25,000 to $44,999:** $3,900
• **$45,000 to $69,999:** $4,900
• **$70,000 to $114,999:** $5,800
• **$115,000 to $159,999:** $8,300
• **$160,000 or more:** $11,200

Generational Differences in Credit Card Debt

Among generations, Gen X holds the highest average credit card balance at $7,750, with Baby Boomers close behind at $7,550. Gen Z has the lowest average balance at $2,047, likely reflecting their younger age and earlier stages in financial life.

However, both Gen Z and Gen X share the highest credit utilization rate at 37%, potentially indicating that these groups are using a significant portion of their available credit.

Here's a comparison of credit card metrics by generation:

| Generation | Average Balance | Credit Utilization % | Average # of Credit Cards | | :----------------- | :-------------- | :------------------- | :------------------------ | | Generation Z | $2,047 | 37% | 1.4 | | Millennials | $4,315 | 30% | 2.5 | | Generation X | $7,750 | 37% | 3.2 | | Baby Boomers | $7,550 | 30% | 3.5 | | Silent Generation | $4,613 | 30% | 3.0 |

Millennials, with an average credit card debt of $4,315, carry less than older generations. Despite challenges like significant student loan debt and entering a difficult job market, their average credit utilization is 30%.

Geographic Variations in Credit Card Debt

Where you live can also influence your credit card debt. Areas with a high cost of living, where wages might not keep pace, can lead residents to rely on credit cards. Conversely, living in a less expensive region might reduce the need for credit card use.

States with the highest average credit card balance:

• Alaska: $8,515
• Connecticut: $7,258
• Virginia: $7,161

States with the lowest average credit card balance:

• Iowa: $5,155
• Wisconsin: $5,363
• Mississippi: $5,421

Generally, larger cities tend to correlate with higher debt. For example, New York, Los Angeles, and San Francisco are among the top five cities for average credit cards held per person. In Alaska, states like Fairbanks, Anchorage, and Juneau have high average balances. More rural states and smaller cities often have lower debt amounts.

Strategies for Managing Credit Card Debt

If you find yourself carrying credit card debt, resources and strategies are available to help manage it. You are not alone, given that over $1 trillion in outstanding balances existed in 2019, with an average per-person debt of over $6,000.

1. **Review your spending:** Analyzing and tracking your expenditures can reveal areas where you can reduce costs. The money saved can then be directed towards debt repayment.
2. **Increase income:** If cutting expenses isn't enough, consider options to earn more. This could involve selling unused items, taking on a side job, or earning additional income.
3. **Explore refinancing options:** High interest payments can slow debt repayment. Options like a 0% APR balance transfer credit card could allow more of your payment to go towards the principal, potentially saving money and accelerating debt reduction.

1. **Communicate with creditors:** Some creditors may be willing to work with you, potentially by reducing interest rates or creating adjusted repayment plans, especially if you are experiencing financial hardship.
2. **Seek professional assistance:** If you're unsure how to tackle your debt, consider contacting a certified credit counselor. Organizations like the National Foundation for Credit Counseling (NFCC) can help you find local counselors who can assess your situation and help develop a debt management plan.