Average Credit Card Debt in America (2024)

FAQs

Average Credit Card Debt in America? ›

To put this into perspective, the average U.S. household with credit card debt has a balance of around $7,226. In November 2021, the interest rate on this debt was around 15%, meaning that the average indebted household was paying $90 per month in credit card interest.

What is the average credit card debt in the U.S.? Based on data from the Federal Reserve Bank of New York and the U.S. Census Bureau (based on 2022 and 2021 data respectively), it can be calculated that each American household carries an average of $7,951 in credit card debt in a year.

Running up $50,000 in credit card debt is not impossible. About two million Americans do it every year. Paying off that bill?

The general rule of thumb is that you shouldn't spend more than 10 percent of your take-home income on credit card debt.

$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.

Credit scores help lenders decide whether to grant you credit. The average credit score in the United States is 705, based on VantageScore^® data from March 2024.

Average American debt payment: 9.8% of income

The Federal Reserve tracks the nation's household debt payments as a percentage of disposable income. The most recent debt payment-to-income ratio, from the fourth quarter of 2023, is 9.8%.

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.

Our survey revealed that over 66% of Americans report living paycheck to paycheck. A recent Bureau of Labor Statistics weekly earnings report indicated a 3.5% year-over-year increase in median weekly earnings for the first quarter of 2024.

The minimum payment mindset

Here's how most people get trapped in credit card debt: You use your card for a purchase you can't afford or want to defer payment, and then you make only the minimum payment that month. Soon, you are in the habit of using your card to purchase things beyond your budget.

What is considered really bad credit card debt? ›

If your total balance is more than 30% of the total credit limit, you may be in too much debt. Some experts consider it best to keep credit utilization between 1% and 10%, while anything between 11% and 30% is typically considered good.

Most lenders say a DTI of 36% is acceptable, but they want to lend you money, so they're willing to cut some slack. Many financial advisors say a DTI higher than 35% means you have too much debt. Others stretch the boundaries up to the 49% mark.

However, multiple accounts may be difficult to track, resulting in missed payments that lower your credit score. You must decide what you can manage and what will make you appear most desirable. Having too many cards with a zero balance will not improve your credit score. In fact, it can actually hurt it.

Balance transfer credit card

If you can afford to pay off your debt during the promotional APR period, a balance transfer card may be your best bet. For example, with $5,000 of debt, a six-month intro APR balance transfer card would allow you to pay off your debt interest-free with $833.33/month payments.

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.

New York Federal Reserve: Gen Z Has Largest Percentage of Credit Card Debt. A growing number of Americans are maxed out on credit cards, with Gen Z leading the way, The Washington Post reported, citing a new report from the Federal Reserve Bank of New York.

How many credit cards does the average person have? According to the latest figures from Experian, the average American has 3.84 credit cards with an average credit limit of $30,365.

The average credit limit on credit cards in the U.S. was $29,855 as of the end of the third quarter (Q3) of 2023. That's a 6.8% increase from Q3 2022, when the average credit limit was $27,955.