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Average Credit Card Debt in the U.S.

There’s no doubt that credit cards can be useful. With a credit card in hand, you don’t have to carry cash everywhere. You can use a cash back credit card to earn extra cash on your usual spending or a rewards credit card for a quick getaway. With all these perks, it’s no surprise that the average American has multiple credit cards. However, credit cards can also lead to some serious debt.

Need to pay off credit card debt? Consider a balance transfer credit card with a 0% intro APR.

The Average Credit Card Debt

The most recent Survey of Consumer Finances by the U.S. Federal Reserve (2013) reports that the average credit card debt per U.S. household is $5,700. Not only is that a huge number, but it may have increased since the report was released.

However, not every household has credit card debt. The same Federal Reserve report found that 38.1% of  U.S. households have credit card debt. If you consider just the households with credit card debt, the average lands even higher. As reported by ValuePenguin in 2016, the average debt for households with credit card debt is a whopping $16,048.

Who Has Credit Card Debt?

In 2017, the Federal Reserve released the most recent version of its Report on the Economic Well-Being of U.S. Households. This report surveyed over 6,000 respondents, providing information about how consumers are doing financially. According to the report, 46% of people have outstanding credit card debt. That means that almost half of U.S. consumers are carrying credit card debt from month to month.

If you look at just the people who have credit card debt, 70% said their debt level is about the same or more than it was a year ago. Only 30% of people said they have less credit card debt than they did a year ago. This statistic is pretty striking. It implies that most people with debt are having a difficult time getting rid of that credit card debt.

Credit card debt also tends to vary from place to place. This is due to changes in cost of living, average home prices and many other factors.

Why People Have Credit Card Debt

Average Credit Card Debt in the U.S.

Some people get into debt as a result of frivolous spending. Impulsively buying things you want, but don’t need, can get you into trouble. However, many people can also accumulate debt just from buying their daily necessities like healthcare and food. Educational debt in particular has increased a lot over the past decade. The Federal Reserve found in 2016 that 20.3% of people have credit card debt as a result of paying for their education. (They had an average of $6,814 in credit card debt from paying for education.)

One simple reason you might have difficulty with credit card debt is if you only make the minimum payment on your credit card bills. The minimum payment may not sound bad and is pretty appealing since you avoid paying the whole balance. However, doing so means you keep a balance that will accrue interest, costing you more money in the long run. Some cards have interest rates over 20%. That can add up quickly and becomes more and more difficult to repay.

Among all people with at least one credit card, 28% reported that they carry a balance most or all of the time. For people with credit card debt, 48% said that they carried a balance at least some of the time. So almost half of people with debt are carrying balances from month to month. If you are carrying balances, you might want to consider a balance transfer credit card to help you pay off your debt. A balance transfer card provides a lower rate for you to pay off your balance. Keep in mind though that the low rate usually only lasts for a limited period.

A Bit of Good News

Credit card debt may be increasing overall but things aren’t all bad. For the past few years, fewer people have reported having credit card debt each year. That’s progress. More people are getting out of debt and staying out of debt by employing responsible money habits. But while this is an improvement, it also means that other people with credit card debt are sinking deeper into debt.

The Takeaway

Average Credit Card Debt in the U.S.

The average U.S. household has about $5,700 in credit card debt but if you only look at the households with credit card debt, the average credit card debt lands over $16,000. Those certainly aren’t comforting numbers, especially knowing that they’re on the rise. However, there are more and more people who are able to get out and stay out of their debt. With the right practices, you can do that, too!

Tips for Getting Out of Debt

  • When it comes to paying off debt, there are a couple of popular strategies you can use. The avalanche method involves paying off the debt with the highest interest rates first. This can save you the most money in the long run, although you might get discouraged if the first debt you try to pay off is also your biggest. Another option is the snowball method, which pays off the smallest debt first, then building your way up to the bigger debts. The advantage of this method is that you can see results more quickly. Here’s an article to help you decide what is the best method for paying off your debt.
  • For some people, credit cards make it too easy to spend money. Whether you buy $10 jeans or $100 jeans, all you need to do is swipe and sign. If you’re struggling with overspending, consider making all your purchases in cash. It may sound annoying but it could help you spend less since you have to physically hand over the money to a cashier. Not only will you need enough cash, but you can quantify the money leaving your possession.
  • If you already have credit card debt, you should make it a priority not to add any new debt. By preventing any new debt, you can focus your energy on paying the debt you already have. The best way to prevent new debt is to always pay your bill in full and on time. It’s OK if you’ve missed payments in the past. Just make sure that from this moment on, you don’t miss any more. Also try to pay your bill in full. Paying the minimum will still add to your debt.

Photo credit: ©iStock.com/AntonioGuillem, ©iStock.com/SIphotography, ©iStock.com/XtockImages

Derek Silva, CEPF® Derek Silva is determined to make personal finance accessible to everyone. He writes on a variety of personal finance topics for SmartAsset, serving as a retirement and credit card expert. Derek is a member of the Society for Advancing Business Editing and Writing and a Certified Educator in Personal Finance® (CEPF®). He has a degree from the University of Massachusetts Amherst and has spent time as an English language teacher in the Portuguese autonomous region of the Azores. The message Derek hopes people take away from his writing is, “Don’t forget that money is just a tool to help you reach your goals and live the lifestyle you want.”
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