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.
$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.
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.
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.
The Rule of 72 is also helpful in evaluating the impact of compounding interest on debt. A credit card debt with an 18% annual interest rate will double in just four years (72 ÷ 18 = 4).
Using more than 30% of your available credit on your cards can hurt your credit score. The lower you can get your balance relative to your limit, the better for your score. (It's best to pay it off every month if you can.)
Running up $50,000 in credit card debt is not impossible. About two million Americans do it every year. Paying off that bill?
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.
For those who can't afford to pay off their credit card balance in full, McClary advises working toward a goal of putting 10% of your income toward this debt each month.
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.
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.
The average FICO credit score in the US is 717, according to the latest FICO data. The average VantageScore is 701 as of January 2024.
Gen X (ages 43 to 58) not only carries the most debt on average of all the generations, but is also the debt leader in credit card and total non-mortgage debt.
In the first quarter of 2023, the Federal Reserve Bank of New York estimated total credit card debt for all Americans was $986 billion. Alaska residents carry the highest credit card debt, while residents of Iowa have the lowest per person.
For example, consider that your credit card has a $10,000 limit. If you spend $3,000 of that limit, you have a credit utilization ratio of 30%. Generally, anything between 1% and 30% is manageable for most consumers. If someone exceeds 30% of their credit utilization ratio, chances are they may be in too much debt.
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.
How much is 26.99 APR on $3,000? An APR of 26.99% on a $3,000 balance would cost $67.26 in monthly interest charges.
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.
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.
35% or less: Looking Good - Relative to your income, your debt is at a manageable level.