What Is The Average American Credit Card Debt?

What is the Average American Credit Card Debt? Find Out How You Measure Up

Virtually every American adult has struggled to manage credit card debt before. With many people facing debt well into the thousands, it’s more important than ever to know how to measure up with other Americans and tackle your credit card debt before it spirals too far out of your control.

Before you can fully address ways to overcome your credit card debt in America, knowing how you compare to others in similar situations is beneficial. Because debt is typically a highly personal situation, many Americans refrain from asking essential questions to know if their debt level is average compared to their peers. To eliminate this uncertainty and instill confidence in your credit future, we’ve compiled the ultimate guide to help you understand general American consumer debt conditions and identify where you stand. Let’s get started!

Two Categories of American Cardholders

Credit card companies categorize American cardholders into two primary sections: individuals who pay off their card balance every monthly billing cycle, and those who do the exact opposite, sometimes referred to as “deadbeats.” While the term is harsh, there’s no denying that credit card debt is becoming a more significant issue for Americans as the years go by, making it more critical than ever to start addressing the debt-shaped elephant in the room.

Key Credit Card Debt Statistics

Before we get into the nitty-gritty of credit card debt breakdowns, let’s look at general credit card debt statistics for the average American. Consider the following as you assess your debt situation:

• An average American household has over $9,000 in current credit card debt.
• Out of all states, Iowa has the lowest credit card debt, with an average of $4,774 per adult.
• Out of all the states, Alaska has the highest credit card debt, with an average debt of $8,026.
• Between 2020 and 2021, credit card accounts with balances 30-59 days past due increased by more than six percent.
• Americans’ average credit card debt as of early 2023 is $6,194.
• According to data from the federal reserve bank of New York, As of the fourth quarter of 2022, the total American credit card balance reached $986 billion, marking the highest average credit card balance since the NY fed started tracking balances in 1999.

Top 10 States With the Least Credit Card Debt

The average Americancredit card debtmight not reflect your situation. Depending on your state, you may want to compare your credit debt to the statewide average rather than the national average. Below are the top ten states with the least credit card debt as of early 2023:

1. Iowa: $4,774
2. Wisconsin: $4,961
3. Mississippi: $5,134
4. Kentucky: $5,140
5. West Virginia: $5,144
6. Idaho: $5,213
7. South Dakota: $5,235
8. Indiana: $5,254
9. North Dakota: $5,265
10. Arkansas: $5,3271

Why so Low?

Are you wondering why these states have a lower average debt than the states listed below? The answer is simple: states further from the coast typically have less average debt, partially due to a lower cost of living.

Top 10 States With the Most Credit Card Debt

Now, let’s look at the ten states with the most credit card debt on average to see where you land:

1. Alaska: $8,026
2. New Jersey: $7,084
3. Connecticut: $7,082
4. District of Columbia: $7,077
5. Virginia: $6,969
6. Maryland: $6,946
7. Texas: $6,753
8. Hawaii: $6,673
9. Georgia: $6,569
10. New York: $6,491

Credit Card Debt by Age Group

Another way to measure the average credit card debt among Americans is by separating individuals into different age groups. Below is a representation of different generations and how their credit card debt matches up against other age groups:

Credit Card Debt by Income Percentile

Another valuable measure of credit card debt is by grouping people based on their income percentile. Below is a breakdown of the average credit card debt by income percentile and the percentage of people in this bracket who carry a balance.

Credit Card Debt by Education Level

Another way to compare how you measure up to the average American in terms of credit card debt is by looking at the average debt based on your highest level of education. While a higher education level is often associated with better financial performance and income, people with higher education tend to have more debt than those without a college degree.

With this factor in mind, and recalling the other average measures of debt, consider the following breakdown of the average American credit card debt based on an individual’s highest education level:

The Impact of Rising Interest Rates

One of the primary factors contributing to high levels of credit card debt is the ongoingrise in interest ratesthat occurs when the Federal Reserve boosts federal fund rates. This increase leads to higher variable APRs for credit cards, meaning that your outstanding credit card balance will rise even more.

Additionally, when your APR rises, you start accruing extra interest on your unpaid balances, which makes it much more challenging to follow a specific repayment plan and timeline. Though it’s best to pay off your variable interest debt as soon as possible, you can also consider other strategies to reduce credit card debt and start getting your finances back on track.

How to Reduce Credit Card Debt

Needless to say, the average American is bound to struggle with managing credit card debt at some point in their life. Whether your debt is in the hundreds or well past the thousand mark, there are ways to improve your financial situation.

Not sure where to start? To help you find a solution to lower your debt, here are some of the best ways to start tackling your payments.

Balance Transfer Card

One of the top ways to chip away at your credit card debt–and one that many Americans don’t know about–is a balance transfer card. This payoff describes a card dedicated to transferring your current credit card debt to a separate account with a lower interest rate to consolidate your current debt.

A balance transfer card is helpful because it charges zero percent interest for a specific period to help you get caught up with your payments and avoid drowning in debt. Some cards provide zero percent interest for up to 21 months, giving you ample time to make a big difference in your debt.

However, balance transfer cards with a zero percent interest for the introductory period may incur balance transfer fees. Additionally, if you aren’t able to pay your balance in full once the zero-interest period ends, you’ll start collecting interest on your remaining balance.

Set Up Automatic Payments

Another option to start tackling your current credit card debt is setting up automatic payments. Credit card holders often accrue interest simply because they forget to pay off their balance on time, resulting in unnecessary costs and damaging their credit scores.

By setting up automatic payments, you can ensure that you pay at least the minimum amount due for each payment cycle. Additionally, you can set up payment reminders with many providers to avoid late payments and costly penalties.

Consolidate Your Debt

If you haven’t considered debt consolidation to tackle your credit card debt previously, now might be the time to do so. Consolidating your debt is most effective when you have several credit cards you attempt to pay off as it offers a fixed interest rate. To qualify for debt consolidation, you will undergo a credit check before receiving a consolidation loan.

Adebt consolidation loancombines all your lingering debts into a lump sum, allowing you to navigate payments more efficiently. However, consolidation loans have high-interest rates that could make the process more difficult in the long run. These loans are reflected on your credit report and can potentially harm your credit score. Always consult a financial advisor before consolidating to ensure this is the right choice for your financial situation.