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.
Running up $50,000 in credit card debt is not impossible. About two million Americans do it every year. Paying off that bill?
High-interest credit card debt can devastate even the most thought-out financial plan. 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.
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.
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.
So, for the purposes of the study, Bank of America set a threshold — households spending at least 90% of their income on necessities could be considered living paycheck to paycheck. By that measure, around 30% of American households are living paycheck to paycheck, according to Bank of America's internal data.
But ideally you should never spend more than 10% of your take-home pay towards credit card debt. So, for example, if you take home $2,500 a month, you should never pay more than $250 a month towards your credit card bills.
If you only make the minimum payment each month, which is typically around 1% of the balance plus interest, here's what you can expect: Time to pay off: Approximately 421 months.
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However, when applying for a larger amount of $20,000 and up, you may need a higher score. A score of around 670 or more will increase your chances of being approved for a larger loan amount at the lowest rates available.
According to the Federal Reserve's Survey of Consumer Finances (SCF) for 2022 (the most recent study released publicly), the average savings balance for people ages 64 and younger ranged from $20,540 to $72,520, with median balances ranging from $5,400 to $8,700.
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.
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.
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.
How long after paying off credit cards does credit score improve? You should see your score go up within a month (sometimes less). Your credit card issuer typically sends an updated report to credit bureaus once a month when your statement period ends.
The amount of time that a debt collector can legally pursue old debt varies by state and type of debt but can range between three and 20 years. Each state has its own statute of limitations on debt, and after the statute of limitations has expired, a debt collector can no longer sue you in court for repayment.
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.
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.
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.
Only 18% of individual Americans make more than $100,000 a year, according to 2023 data from careers website Zippia. About 34% of U.S. households earn more than $100,000 a year, according to Zippia.
One reason the authors of the analysis offer in their report is that “higher-income households may have bought larger, more expensive, homes and consequently have bigger mortgages. And often along with bigger homes come bigger insurance costs, property taxes and utility bills.”