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.
U.S. consumers carry $6,501 in credit card debt on average, according to Experian data, but if your balance is much higher—say, $20,000 or beyond—you may feel hopeless. Paying off a high credit card balance can be a daunting task, but it is possible.
At the close of 2019, the average household had a credit card debt of $7,499. During the first quarter of 2021, it dropped to $6,209. In 2022, credit card debt rose again to $7,951 and has increased linearly. In 2023, it reached $8,599 — $75 shy of the 2024 average.
Having $20,000 in available credit is good if you use no more than $6,000 of that limit. It's best to keep your usage to $2,000 or less at any one time. That way, you keep your credit utilization ratio below 10%, which is great for your credit score.
Consolidated Credit offers a free credit card debt worksheet that makes it easy to total your current balances and credit limit. The 30 percent threshold applies to your total debt and each account. You want to maintain a balance of less than 30 percent on each card.
You might have too much credit card debt if: Your credit card balances are accruing lots of interest. If your credit cards have high interest rates and you're carrying balances that are accruing a lot of interest each month, you may be putting yourself in a difficult financial position.
Running up $50,000 in credit card debt is not impossible. About two million Americans do it every year. Paying off that bill?
Average American Debt by Age
Here's a look at how much nonmortgage debt Americans have by age group, and the average non-mortgage per capita debt for each group: 18-29-year-olds: $69 billion total, $12,871 average. 30-39-year-olds: $1.17 trillion, $26,532 average.
If you cannot afford to pay your minimum debt payments, your debt amount is unreasonable. The 28/36 rule states that no more than 28% of a household's gross income should be spent on housing and no more than 36% on housing plus other debt.
Here's the average debt balances by age group: Gen Z (ages 18 to 23): $9,593. Millennials (ages 24 to 39): $78,396. Gen X (ages 40 to 55): $135,841.
If you're carrying a significant balance, like $20,000 in credit card debt, a rate like that could have even more of a detrimental impact on your finances. The longer the balance goes unpaid, the more the interest charges compound, turning what could have been a manageable debt into a hefty financial burden.
It's a good idea to pay off your credit card balance in full whenever you're able. Carrying a monthly credit card balance can cost you in interest and increase your credit utilization rate, which is one factor used to calculate your credit scores.
The average U.S. household has credit card debt of about $6,100, according to the Federal Reserve's most recent Survey of Consumer Finances, issued in November 2023.
In a recent NerdWallet survey, 57% of Americans said they were living paycheck to paycheck.
Credit card debt is a common problem that can empty your wallet, drag down your credit scores and even strain your mental health.
This approach typically involves negotiating with credit card companies to settle your debt by making a single lump-sum payment that's lower than your current balance. However, debt forgiveness isn't a simple fix, and careful consideration is necessary before pursuing this route.
If your result is less than 36%, your debt load is affordable, according to NerdWallet. If it's between 36% and 50%, consider taking action, such as consulting a nonprofit credit counseling service, to reduce your debt. 50% or more is “high risk,” NerdWallet says and suggests getting advice from a bankruptcy attorney.
Closing a credit card can hurt your credit, especially if it's a card you've had for years. An account closure can cause a temporary hit to your credit by increasing your credit utilization, lowering your average age of accounts and possibly limiting your credit mix.
It's a red flag for budgets. Though incomes are up, Americans are putting more on plastic and stretching to pay on time, reinforcing the precarious nature of cash flow.