Take care when using credit cards. Only use them for purchases you can afford, and pay off your statement balance every month. Otherwise, you'll be charged interest fees. These can add up fast, resulting in costly credit card debt.
Unfortunately, credit card debt is a growing problem for many Americans. Let's explore how much credit card debt the average American has and discuss the best strategies to tackle this type of debt.
The average credit card balance is $6,501
A recent The Motley Fool Ascent research study examined the average American household's debt. Unsurprisingly, many Americans have debt. According to data from Experian, the average credit card balance in the third quarter of 2023 was $6,501, up from $5,910 in 2022. These figures show that credit card debt is a growing issue for many American households.
Featured offer: save money while you pay off debt with one of these top-rated balance transfer credit cards
Delinquent payments are also a growing problem
In addition to increasing credit card balances, increased delinquent payments are another trend. The same study examined delinquency rates for payments that were at least 30 days past due. The Federal Reserve found that in Q4 of 2023, the delinquency rate for credit card loans for commercial banks was 3.1% -- up from 2.98% in Q3 of 2023.
Paying your bills, including your credit cards, on time every month is essential. Paying late could negatively impact your credit score and your finances overall. Once a payment is at least 30 days past due, it can show on your credit report.
Additionally, the biller can charge late fees, which can be especially costly for credit cards.
Always pay your bills on time to avoid late fees and negative marks on your credit report. To avoid forgetfulness, consider setting up automatic payments through your credit card issuer.
How to tackle credit card debt
If you have credit card debt, you're not alone. But don't feel discouraged. It's possible to eliminate your debt. Here are two strategies that can help you tackle this debt faster.
Pay more than the minimum amount due
Your credit card statement will list the total balance and the minimum amount due. If you only make the minimum payment, you'll continue to be charged interest on any debt you carry, and your debt will grow quickly. Be sure to pay more than the minimum payment amount due.
Paying more toward the credit card with the highest interest rate can save you money on interest charges in the long run. But always pay at least the minimum amount due on every card. Write down the balance for each card and each card's interest rate to make a payoff plan.
Save on interest with a balance transfer credit card
Using a balance transfer credit card can help you pay off debt sooner. Many of the best balance transfer credit cards offer introductory 0% APR on balance transfers. You'll be charged a balance transfer fee (typically 3% to 5%) on the total amount transferred, but you can avoid additional interest charges during the promotional period -- which can offer big savings.
Many cards offer 0% interest for 15 to 18 months, making it easier to pay off debt quickly. However, you must pay the entire balance before the promotional period ends to avoid interest charges on your remaining debt.
Here's an example of how you could pay off your credit card debt faster: Let's imagine you transfer $5,000 worth of debt to a balance transfer card offering 0% interest for 15 months. If the credit card company charges a 5% balance transfer fee, your total new balance will be $5,250.
By paying $350 each month for 15 months, you will avoid additional interest fees and pay off all your debt. A balance transfer card may be helpful if you have significant credit card debt.
Don't give up hope
It's important to remain hopeful throughout your debt payoff journey. If you stay committed and continue to make an effort to tackle your debt, you can get out of debt. Using one of the best debt payoff apps can help you stay focused and track your progress. I believe in you.
Alert: our top-rated cash back card now has 0% intro APR until 2025
This credit card is not just good – it’s so exceptional that our experts use it personally. It features a lengthy 0% intro APR period, a cash back rate of up to 5%, and all somehow for no annual fee! Click here to read our full review for free and apply in just 2 minutes.
FAQs
The average credit card balance is $6,501
How much credit debt does the average American have? ›
On an individual level, the overall average balance is around $6,501, per Experian's data. Other generations' credit card debt falls closer to that average or below. Here's the average amount of credit card debt Americans hold by age as of the third quarter of 2023, according to Experian.
How many credit cards does the average American have? ›
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.
What percentage of America is debt free? ›
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.
What is the debt level in the United States? ›
U.S. Household Debt Is at an All-Time High
The total household debt of $17.3 trillion entering 2024 is a new high for the U.S.
How deep in debt is the average American? ›
The average debt an American owes is $104,215 across mortgage loans, home equity lines of credit, auto loans, credit card debt, student loan debt, and other debts like personal loans. Data from Experian breaks down the average debt a consumer holds based on type, age, credit score, and state.
What is the average credit card debt held by Gen Z? ›
Credit card debt: $3,262
It's the youngest generation that's of legal age to have their own credit cards, so they haven't had access to the convenience of this form of payment as long as other generations. Even so, the average credit card debt for Gen Zers was $2,854 in the third quarter of 2022, according to Experian.
What is the average credit score in the United States? ›
The average FICO credit score in the US is 717, according to the latest FICO data. The average VantageScore is 701 as of January 2024. Credit scores, which are like a grade for your borrowing history, fall in the range of 300 to 850.
How much credit card debt is okay? ›
The general rule of thumb is that you shouldn't spend more than 10 percent of your take-home income on credit card debt.
What age group has the most credit card debt? ›
Average credit card debt by age group
| Generation | Average credit card debt |
|---|
| Baby boomers (58–76) | $6,245 |
| Generation X (42–57) | $8,134 |
| Millennials (26–41) | $5,649 |
| Generation Z (19–25) | $2,854 |
2 more rowsFeb 14, 2024
For the purposes of this survey, living paycheck to paycheck describes a financial scenario in which an individual or family's income barely covers essential living expenses like housing, utilities, groceries and transportation. One missed paycheck would put someone living paycheck to paycheck in a difficult spot.
Which gender holds the most credit card debt? ›
Women are stereotypically seen as irresponsible spenders, but the data doesn't back this up. According to a 2019 Experian study, men carry more debt than women across nearly all categories, including credit card debt — the study found that men have $125 more in credit card debt than women on average.
How many Americans have no savings? ›
Many, it turns out, are not. A new Empower study reveals more than 1 in 5 (21%) Americans have no emergency savings — money set aside for unexpected financial events such as job loss, home and car repairs, and medical bills. Nearly 2 in 5 (37%) couldn't afford an emergency expense over $400.
What is the average non mortgage debt? ›
That breaks down into $241,815 on average in mortgage debt, and an average of $23,317 in non-mortgage debt (including credit card, student loan, auto loan and personal loan debt).
How much debt is normal? ›
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%.
Who is the US most in debt with? ›
Nearly half of all US foreign-owned debt comes from five countries. All values are adjusted to 2023 dollars. As of January 2023, the five countries owning the most US debt are Japan ($1.1 trillion), China ($859 billion), the United Kingdom ($668 billion), Belgium ($331 billion), and Luxembourg ($318 billion).
What is the average credit of an American? ›
What is the average credit score? The average FICO credit score in the US is 717, according to the latest FICO data. The average VantageScore is 701 as of January 2024. Credit scores, which are like a grade for your borrowing history, fall in the range of 300 to 850.
What is considered a lot of credit card debt? ›
You don't want to check your debt-to-income ratio every time you make a few charges. So, there's an easier ratio you can use to measure when you have too much credit card debt. It's your credit card debt ratio. In general, you never want your minimum credit card payments to exceed 10 percent of your net income.
How much debt does the average 30 year old have? ›
Average credit card debt by age and generation
| Generation | Ages | Credit Karma members' average credit card debt |
|---|
| Gen Z | Members 18–26 | $2,781 |
| Millennial | 27–42 | $5,898 |
| Gen X | 43–58 | $8,266 |
| Baby boomer | 59–77 | $7,464 |
Apr 29, 2024
Approximately 16% of Americans have bad credit, according to Experian data. What the Experian data indicates is that more people have very good credit scores than have bad or subprime credit scores. This may come as a surprise to some, but most people in the U.S have pretty good credit.
