Americans carried a balance on 53% of all active credit card accounts in the fourth quarter of 2021, according to the most recent available data from the American Bankers Association. Job No. 1 for anyone with a credit card is to pay off that balance in full at the end of each month.
A separate survey conducted by Inside 1031 found that 55% of people carry a credit card balance from month to month. In addition, 40% haven't been credit card debt-free since before 2018 — and 15% have had credit card debt since before 2006.
According to data from the American Bankers Association, 43% of credit card accounts carried a balance as some point in Q2, 31% of accounts were active but didn't carry a balance and 26% of accounts were dormant for the quarter.
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.
Average credit card balance: $5,221. Average revolving utilization rate: 25 percent. Average number of credit cards: 3.
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.
So how much non-mortgage debt do Americans have? According to Northwestern Mutual's 2021 Planning & Progress Study, U.S. adults aged 18 and over who carry debt hold an average of $23,325 outside of their mortgages.
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.
44% Pay Off Their Full Credit Card Balance, Survey Finds: Pros and Cons of This Strategy. GOBankingRates recently surveyed more than 1,000 American adults about their credit-card habits — and the results revealed some promising trends.
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.
Data shows just how many people have credit cards, and more specifically how many Americans have credit cards. 70% of the United States population carries a credit card, with 34% of Americans carrying 3 or more cards.
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.
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.
Likewise, millennial consumers (ages 25 to 40) have an average of $27,251 in non-mortgage debt, presumably across credit cards, auto loans, personal loans and student loans.
Among today's college students, 65% graduate with student debt. Between 39% and 50% of indebted student borrowers have loans from both undergraduate and postgraduate education.
Kevin O'Leary, an investor on “Shark Tank” and personal finance author, said in 2018 that the ideal age to be debt-free is 45. It's at this age, said O'Leary, that you enter the last half of your career and should therefore ramp up your retirement savings in order to ensure a comfortable life in your elderly years.
When you have no debt, your credit score and other indicators of financial health, such as debt-to-income ratio (DTI), tend to be very good. This can lead to a higher credit score and be useful in other ways.
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.
50 years or older = $96,984
Baby boomers have an average debt of $96,984, according to Experian. Mortgages, credit card bills, and auto loans are the three main debt sources for those in this age group. Although this is less than the average debt of those 35—49, it could still spell trouble for two primary reasons.
Key Takeaways. In order to keep your debt load under control, a household may look to the so-called 28/36 rule. The 28/36 rule states that no more than 28% of a household's gross income be spent on housing and no more than 36% on debt service.
Being debt free to start with means having minimal to no bad debts and average good debts. Being debt free doesn't mean you have no mortgage, bills, or car payment. It means you carry a manageable amount of debt, and are cognizant of your borrowing and DTI.