According to the Federal Reserve, only 45% of U.S. cardholders pay their card balance every month. Here's a closer look at the card payment numbers from the Fed: 45% always pay their card balance in full each month.
Here's how to keep your credit card debt down
The most common credit card balance people carry ranges from $1 to $2,500, with 40% of people saying they carry this amount monthly.
Nearly Half Pay Their Bill in Full Every Time
9.12% pay off as much as they can. 13.38% make only the minimum payment.
It's Best to Pay Your Credit Card Balance in Full Each Month
Leaving a balance will not help your credit scores—it will just cost you money in the form of interest. Carrying a high balance on your credit cards has a negative impact on scores because it increases your credit utilization ratio.
A separate survey conducted by Inside 1031 found that 55% of people carry a credit card balance from month to month.
How many Americans are currently delinquent with their credit card payments? Just 1.73% of credit card accounts are currently at least 30 days delinquent.
If you have credit card debt, you're not alone. On average, Americans carry $6,194 in credit card debt, according to the 2019 Experian Consumer Credit Review.
Despite what you may have heard through the grapevine, it's always better to pay off your entire balance — or credit debt — immediately. Not only will this save you time and money, but it'll reflect well on your credit score.
Carrying a balance does not help your credit score, so it's always best to pay your balance in full each month. The impact of not doing paying in full each month depends on how large of a balance you're carrying compared to your credit limit.
So if you max out a credit card, your balance will go up. That, in turn, can raise your minimum monthly payment. If you pay off your balance, you can avoid a higher minimum monthly payment. But if you make only the minimum payment each month, it can drag out the amount of time it takes to pay off the balance.
And yet, over half of Americans surveyed (53%) say that debt reduction is a top priority—while nearly a quarter (23%) say they have no debt. And that percentage may rise.
The average debt for individual consumers dropped from $6,194 in 2019 to $5,315 in 2020. In fact, the average balance declined in every state.
How much money does the average American owe? According to a 2020 Experian study, the average American carries $92,727 in consumer debt. Consumer debt includes a variety of personal credit accounts, such as credit cards, auto loans, mortgages, personal loans, and student loans.
Over half of those surveyed, 56 percent, say they've had credit card debt for at least a year. And most will continue to carry it for years to come. Almost 20 percent estimate it will take them more than three years to pay off their debt, while roughly 8 percent say they don't know when they'll be able to pay it down.
While the average American has $90,460 in debt, this includes all types of consumer debt products, from credit cards to personal loans, mortgages and student debt.
In August 2021, about 64 million people with a credit record (about 28 percent of Americans) had debt in collections on their credit report, down from 68 million in 2019.
Having accounts open with a credit card company will not hurt your credit score, but having zero balances will not prove to lenders that you are creditworthy and will repay a loan. Lenders want to make sure you repay, and that you will also pay interest.
Credit utilization — the portion of your credit limits that you are currently using — is a significant factor in credit scores. It is one reason your credit score could drop a little after you pay off debt, particularly if you close the account.
INCREASED SAVINGS
That's right, a debt-free lifestyle makes it easier to save! While it can be hard to become debt free immediately, just lowering your interest rates on credit cards, or auto loans can help you start saving. Those savings can go straight into your savings account, or help you pay down debt even faster.
In fact, it could hurt them. Credit utilization is the second most important factor in credit scoring. The lower your utilization rate, also called balance-to-limit ratio or utilization ratio, the better.
Paying off a credit card doesn't usually hurt your credit scores—just the opposite, in fact. It can take a month or two for paid-off balances to be reflected in your score, but reducing credit card debt typically results in a score boost eventually, as long as your other credit accounts are in good standing.
Credit Card Debt Trends
In Q4 2021, the average credit cardholder in the U.S. had $5,934 in credit card debt in Q4 2021 — about 0.6% less than Q4 2020's $5,968 average. During this same period, Americans opened 26 million more credit card accounts.
The average credit card debt for 30 year olds is roughly $4,200, according to the Experian data report.
The USA is in the lead, according to global credit card debt statistics, with average 2020 debt of $5,331. Next come Canada ($4,154), the UK ($3,245), and Japan ($2,900).
One major reason people pay bills late: They simply forget.
Of those that were delinquent, 35% said they paid late because they forgot to pay their bill. Another 33% said they paid late because they needed the money to pay for essentials. And 32% said it was because they had an unexpected emergency.