What is the Average Credit Card Debt of Adults in the United States?
A detailed analysis of credit card debt in America with suggestions on how to handle an overwhelming debt load.
Ask the average American how much credit card debt his or her fellow citizens have, and you’re likely to get an ear full. Given the value to the media of reporting dire figures and dangerous consequences, it is easy to find a range of data, from the tame and mild to the outrageous and wild.
How much credit card debt does the average American have?
The average American adult has just $1,385 in credit card debt. This figure results from dividing the total US credit card debt from December 2021 of over $357 Billion according to NerdWallet.com by the roughly 332 Million Americans the US Census Bureau estimates there were in the US as of July 2021.
Why is this figure so much lower than most figures?
This is where the adage comes into play: “You can make statistics say whatever you want.” It all depends on how you interpret both the question and the data.
What Constitutes Credit Card Debt
Let’s start with the two phrases in the question. First, what is credit card debt? Credit card debt might include all purchases made on credit cards plus interest added on any given day of the year. This begs the question, should you include purchases that the cardholder pays off in full with their next credit card bill? Is any balance on a credit card debt, or does credit card debt only include balances that are not paid in full by the end of the billing cycle?
Personally, I believe purchases paid in full by the next payment due date are still debts. You owe the money regardless of whether you carry the balance or whether you will be charged interest. I consider this type of debt to be practical debt. According to the Federal Reserve Bank of New York, all credit card debts totaled over $856 Billion by late 2021.
That said, it makes sense to exclude the $499 Billions of this type of practical debt from the statistics since there is technically no payment due on it nor interest owed yet. Using this larger figure creates the impression that Americans “carry” more debt than they actually do.
The $357 Billion of credit card debt identified by NerdWallet includes only the amount of credit card debt that is carried from one bill to the next, meaning it also excludes practical debt.
Defining the Average American
The term, Average American, is where the real trouble starts when it comes to this statistic. What does Average mean, and what is meant by American?
The technical definition of “average” most commonly refers to the mean value of a set of numbers, meaning you add all the numbers up and divide them but how many numbers there are. For example, the average of the set of numbers 4 and 6 is 5 (4+6=10÷2=5). That is logical. However, the average of 1, 1, and 13 is also 5, even though the numbers vary so greatly.
The US Census Bureau estimated there were 332 Million Americans in mid-2021. Should you, therefore, use the figure of 332 Million in the equation to determine credit card debt?
Let’s complicate this question one more time before we get to clarifications. What is meant by the term “American?” All Americans would be encompassed by the Census Bureau figure of 332 Million.
However, not all Americans have credit card debt or are even permitted to have a credit card. Unless you are an adult of at least 18 years of age, you cannot legally have a credit card on your own in your own name. The Census Bureau says that 77.7% of Americans are 18 years old or older, meaning there are approximately 258 million American adults.
Dividing $357 Billion of carried credit card debt only by the number of American adults results in an average credit card debt of $1,385, or over $300 more than the initial figure.
This post, however, is attempting to show the credit card debt of the “Average American.” Does the average American adult even have a credit card? Not surprisingly, he or she does. 71% of American adults have at least one credit card. That means that the average American cardholding adult has about $1,950 in credit card debt.
Taking one last step in the same direction, the post title implies that the average American is the person who regularly carries credit card debt from one month to the next, paying interest month after month to the credit card companies. Inside 31 found in 2021 that a whopping 55% of credit cardholders regularly carry a balance on their credit cards. That works out to nearly 101 Million American adults. Consequently, their average credit card debt is $3,545.
Credit Card Debt Data and Statistics
Credit card debt statistics vary widely based upon the data used in the calculations as well as the definitions accepted in the equations. The average credit card debt for Americans can vary from $1,344 to $5,192 depending upon which Americans are included in the calculation.
Total Credit Card Debt Owed by Americans:
$856 Billion*
Total Credit Card Debt Carried from Month to Month, as of December 2019:
$357 Billion
Total US Population as of January 1:
331.9 Million
Total US Adult Population:
257.8 Million
Total US Credit Cardholders:
183.1 Million
Total US Credit Cardholders who Carry Debt:
100.7 Million
Total US Households*:
122.3 Million
Average Credit Card Debt per American:
$1,076
Average Credit Card Debt per American Adult:
$1,385
Average Credit Card Debt per American Credit Cardholder:
$1,950
Average Credit Card Debt per American carrying a Balance on their Credit Card:
$3,545
Average Credit Card Debt per American Household*:
$2,918
*Not used in calculations
Credit Card Payoff Options
While the $3,545 of credit card debt per balance-carrying American is not nearly as high as figures found elsewhere, it is still significant enough to create a drag on the finances of such individuals. At the average interest rate of 20.5% APR (according to TheBalance), that individual will pay $1.99 per day, $13.93 per week, $60.53 per month, and $726.33 per year in interest, assuming they start each month with the exact same $3,545 balance.
If the credit card companies require an average of 3% of the balance or a minimum payment or $15 (whichever is greater), the consumer would need nearly 17 years to pay off that debt, paying an additional $4,282 in interest for a grand total of $7,827 of debt repaid.
Carrying Debt Is Expensive
No consumer in their right mind wants to more than double the amount they pay for something because of interest. When you are ready to focus your energies on accelerating your debt repayment in order to minimize the amount of interest you pay, there are four possible approaches you should consider, explained below.
First, however, to truly accelerate your debt repayment, you will need to send more than the minimum payment required by your creditors. Use our PowerCash calculator to find anywhere from $50 to $200 of your household income you can redirect to your debt repayment activities without much pain.
Do-It-Yourself Credit Card Repayment Options
Your goal should be to pay off your credit card debt in full. Many consumers work to pay down their credit card debts for a year or two only to relapse and take their balances back up to the same (or worse) levels they were at previously.
Your secondary goal should be to pay as little interest as possible. Paying more interest than necessary means you have that much less money, in the end, to spend on your own needs and wants.
With these two goals in mind, review the following do-it-yourself debt relief approaches to determine which fits your situation best.
The Debt Avalanche
This method focuses all your PowerCash on your account with the highest interest rate first. For all other accounts, you are making the minimum payment. Once an account is paid in full, take the payment you were sending previously to that account and “load” it onto your current account with the highest interest rate.
There is no question that using this method, if you will stick with it, will save you the most money in interest payments and will have you out of debt sooner than any other method. This is the case whether you have $500 of debt across two accounts or $50,000 across ten accounts.
If you have the discipline to stick with this method, you will not regret it. Just be aware that it may take a year or two or more before you pay off your first account in full. If you are worried you might not stick or you might lose your motivation, you might consider another approach.
The Debt Landslide
The Debt Landslide is the best debt relief approach if you plan to purchase a home within the coming year or two or will otherwise need to improve your credit rating as quickly as possible. Rather than sending your PowerCash to the account with the highest interest rate, you will send your PowerCash to your account opened most recently.
All major credit scoring models in the US lend more weight to activities (payments, purchases, etc.) on newer accounts than they do on older accounts. Thus, by accelerating the balance paydown on your newest account, you are accelerating your credit building at the same time.
The Debt Snowball
Well-known thanks to a nationally syndicated radio talk show host and his obsessed proselytes, the Snowball has somehow become the default option for many Americans deciding to get out of credit card debt. Here’s the problem: using this approach means you will pay more interest and take longer to become debt-free than you would if you were dedicated to the Avalanche.
Using the Debt Snowball, you send your PowerCash to the account with the lowest balance. This way, you can get a quick and easy “win” by eliminating one account. The argument then says this leaves you better able and more motivated to attack the next debt on your list, giving you the stick-to-itiveness necessary to achieve your number one goal of becoming debt-free.
While there are studies that suggest such an approach is the most motivational for consumers, other studies show that the most motivational approach is the one the consumer believes in most. Because Snowballers have been so successful at spreading the word about this approach, many people now believe it is the best approach. If we can spread the same word about the Avalanche method, consumers could keep millions of dollars a year in their own pockets.
The Debt Cascade
What if you don’t have room for PowerCash and can only afford your minimum payments. The Debt Cascade is for you.
Rather than sending extra cash to a top priority account, send your minimum payments and stop using your credit cards. Next month, because you made payments this month, your credit card companies will ask you for a little less as your minimum payment. Do NOT go that way.
Send them the same payment next month that you are sending this month. It may only be a dollar or two more than they requested, but do the same the following month. What you have done is “fixed” this month’s minimum payments as your future monthly payments. Each month, your credit card companies will ask for less and less than you are paying. Pretty soon, you will be sending an extra $20 or $50 or even $100 than they are requiring. At that point, you can switch to the Avalanche, Landslide, or Snowball, using that extra money to accelerate the debt repayment on the account you have chosen to prioritize.
Credit Card Debt Calculator
If you have credit card debts and are unsure just how much your monthly minimum payments add up to, you can estimate them with our minimum credit card payment calculator.
To estimate how much interest you are paying each day, week, month, and year based on your current credit card balance(s), use our Credit Card Interest Calculator.
Credit Card Debt Relief
If you have gone through the Do-It-Yourself options above and are not able to make them work for you, you may greatly benefit from a third-party program or service to get you some debt relief. Look over the following three options to get out of debt to see if they match your needs.
Get Help with Credit Card Debt
The first place to turn for help, should you need professional assistance, should NOT be your sister-in-law who took a finance class in college on her way to a business degree. That does not qualify her as a financial professional. Start with a nonprofit credit counseling agency like Money Fit that offers credit card debt consolidation.
Through their DMP, a credit counseling agency will work with your current creditors to have them lower your interest rates and waive your late fees, leading to lower monthly payments and a Debt Freedom Day just five years or less away.
Credit counseling agencies do charge some small, regulated, and capped fees of their own if you choose to use their DMP, but they will disclose them up front when they estimate your new monthly payment. There is no cost for the consultation, direct effect on your credit rating, nor do they charge any sort of pre-payment fee during the program.
Debt Settlement
If your goal is just to get out of debt and not worry about your credit rating for the next seven years, and if you have a stash of cash or have received a windfall recently, you might consider debt settlement with your creditors.
Debt settlement means you negotiate with your lenders and ask them to accept much less than what you own in exchange for a single, large lump sum. This lump sum typically equates to about 50% of the total amount owed.
If you go this way, be aware of the significant downsides. Your credit will take a big hit, since you are not paying as agreed, for the next seven years. Additionally, if not done properly and in writing, the lender might accept a 50% payment and sell the remaining balance to a collection agency that will attempt to college the other half.
If you choose to work with a debt settlement company, be extremely wary. We regularly hear from former debt settlement company clients who were told to write their creditors asking them to stop all further contact. By law, creditors are no longer allowed to call, text, email, or even snail mail you. What they often do is take you to court, win a default judgment against you, and then proceed to contact your employer to garnish your wages. Plus, the debt settlement company will collect its fee, regardless of its success, and you will still end up paying between 75% and 95% of your original balance.
Bankruptcy
Known as the nuclear option when it comes to debt, bankruptcy exists for a reason. If you are in such financial turmoil that you are struggling to cover living expenses and pay creditors even their minimum required amount due, bankruptcy may be a consideration.
First, however, look at any expense you can cut back on our cut out of your budget altogether. Do you have a large cell phone bill? It may be time to go with a more affordable carrier. Do you have a large car or truck payment? Selling the vehicle and getting one that is more affordable may be a better option for your future. Is your car insurance killing you? Shop around for a better deal. Do not assume that just because you have been with the insurance company for decades, you are getting their best discounts. The opposite can sometimes be true.
Are you dining out frequently? Do you take luxurious vacations each year? Do your kids have iPhones and iPads? Do you smoke or vape a lot? Look at every spending habit you have and can change before you proceed with bankruptcy. During the bankruptcy process, you will give up a lot of independence when it comes to financial decisions.
Even if you think bankruptcy is still your best option, the 2005 BAPCPA law requires bankruptcy filers to first meet with an approved credit counseling agency to go through a budget briefing for a certificate. So, head back to your first option under this third-party section and speak with a nonprofit credit counselor.
Related Questions
What percentage of Americans have credit card debt?
According to Inside 31, 55% of American adults carry a credit card balance regularly from month to month. The Federal Reserve Bank found the figure to be 57% of credit cardholders carried a balance at least once during the previous year.
How many Americans are debt-free?
Approximately 80% of all American adults have a debt of some sort. The types of debts vary by generation, with Baby Boomers having more credit cards, mortgages, medical, and personal loan debt. As a percentage, Millennials have more student loan and personal loan debt than other generations, while Gen Xers lead in automobile debt and unpaid bills.
What is the average credit card debt in the United States by age?
Watch this short presentation by our Financial Education Manager, Todd R. Christensen, for detailed information on how much debt the average American carries, as well as how those figures change by age.
