Terms may apply to offers listed on this page. The typical consumer pays $430 a month toward their credit card debt. If you can't afford your monthly payments, look for ways to lower them. A balance transfer or personal loan could make your debt easier to manage.
About 28% of card users say they find it difficult to make the minimum payments on their credit cards and 14% say they've missed a payment this year. On average, Americans spend $1,506 on their credit cards each month, which translates to more than $18,000 a year.
The average monthly credit card bill is a minimum payment of $110.50, based on the average American credit card balance of $5,525 and the average minimum payment percentage of 2%.
Usually, the minimum payment is calculated as a small percentage of your credit card balance, often 1% to 4%, or a predetermined fixed amount, whichever is higher. A large balance: If you have over $1,000 on your card, your minimum payment will typically be a percentage of your balance plus fees.
$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. There are a few things you can do to pay your debt off faster - potentially saving thousands of dollars in the process.
Average American Credit Card Debt
The Federal Reserve study does not provide numbers for the average credit card balance per consumer. However, according to recent numbers put out by Transunion, this figure rose from $5,474 in Q3 2022 to $6,088 in Q3 2023.
If you only make minimum payments, a $10,000 credit card balance will cost you $16,056.59 in interest and take 346 months to pay off. Minimum payments on a $10,000 balance would start at $267 and decrease as you paid down what you owe.
Let's say you have a balance of $20,000, and your credit card's APR is 20%, which is near the current average. If your card issuer uses the interest plus 1% calculation method, your minimum payment will be $533.33. That's quite a bit of money to pay for your credit card bill every month.
A minimum payment of 3% a month on $15,000 worth of debt means 227 months (almost 19 years) of payments, starting at $450 a month. By the time you've paid off the $15,000, you'll also have paid almost as much in interest ($12,978 if you're paying the average interest rate of 14.96%) as you did in principal.
The Takeaway
The 15/3 credit card payment rule is a strategy that involves making two payments each month to your credit card company. You make one payment 15 days before your statement is due and another payment three days before the due date.
The best way to pay off $3,000 in debt fast is to use a 0% APR balance transfer credit card because it will enable you to put your full monthly payment toward your current balance instead of new interest charges. As long as you avoid adding new debt, you can repay what you owe in a matter of months.
Bottom line. If you have a credit card balance, it's typically best to pay it off in full if you can. Carrying a balance can lead to expensive interest charges and growing debt.
Around 23% of Americans are debt free, according to the most recent data available from the Federal Reserve. That figure factors in every type of debt, from credit card balances and student loans to mortgages, car loans and more. The exact definition of debt free can vary, though, depending on whom you ask.
Most Americans have some credit card debt. A recent Clever Real Estate survey found that 3 in 5 Americans (61%) are in credit card debt, owing an average of $5,875. In addition, 23% say they go deeper into credit card debt every month and 14% say they've missed a payment in 2023.
Running up $50,000 in credit card debt is not impossible. About two million Americans do it every year. Paying off that bill? Well, that's not impossible either, though it is considerably less fun.
3 tips to pay down your credit card debt quickly
About 14 million Americans are at least $10,000 in credit card debt, according to a new survey. Here's what you can do to pay yours down.
Adam McCann, Financial Writer
Yes, $25,000 is a high credit card limit. Generally, a high credit card limit is considered to be $5,000 or more, and you will likely need good or excellent credit, along with a solid income, to get a limit of $25,000 or higher.
It will take 21 months to pay off $7,000 with payments of $400 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.
With a balance of less than $25, your minimum payment is that total amount. If your balance is over $25, the minimum payment is $25 or 1% of your balance plus new interest and late payment fees, whichever is greater. Any amount that's already past due is also added to your monthly minimum payment.
In the U.S., the average credit score is 716, per Experian's latest data from the second quarter of 2023. And when you break down the average credit score by age, the typical American is hovering near or above that score.
Credit card balances grew 10% to $6,501 in the 12 months from Q3 2022 to Q3 2023, as higher interest rates sharply increased in 2023. Consumers were by and large still able to service those balances, thanks to a tighter labor market leading to both higher employment and higher incomes.