Credit card debt: How much does the average American have?

Written by Luke BabichNovember 4th, 20224 minute read

The issue of credit card debt is nothing new for many Americans, but will a looming economic recession make matters worse? As the cost of basic goods and services continues to rise, it seems more people are being forced to use credit cards to get by.

Unfortunately, today’s interest rates could turn this convenience into a financial headache. According to the Consumer Financial Protection Bureau, a person with a $5,000 credit card balance may pay an additional $1,000 in interest over the course of just one year.

So how much credit card debt does the average person have?

A new study by Anytime Estimate surveyed 1,001 people to learn more about credit card usage, debt, and spending habits. The study’s findings reveal that credit card debt is not only concerning, but incredibly prevalent.

76% of Americans have had credit card debt at some point in their lives

It appears most people have had to rely on credit cards at some point or another, which underscores how common this type of debt is. Roughly 76% of Americans say they have had credit cards with a balance at some point during their lifetime.

Today, 46% of Americans are currently in credit card debt, owing an average of $6,093.

That said, as we look at generational differences, it appears there are variations among age groups.

The average baby boomer in credit card debt owes more than younger Americans, coming in with an average of $8,208 in debt, compared to $6,182 for millennials and $3,196 for those who are a part of Gen Z.

It’s also worth noting that millennials were four times more likely than baby boomers to report missing a payment in 2022.

Most Americans with credit card debt also have other forms of debt

Although credit cards can lead to the most burdensome type of debt, 4 in 5 Americans with credit card debt also have some other form of debt. This includes auto loans, medical bills, mortgage debt, and student loans. However, most still say their credit card debt is the most stressful type of debt they’re currently carrying.

For those who are using their credit cards every month, the average monthly charges amount to $1,579. Despite the stress associated with credit card usage, many people say they simply can’t afford to go without this form of payment. In fact, approximately 43% of Americans say they depend on their credit cards for essential living expenses, not frivolous shopping. This includes housing costs, food, and utilities.

This increasing need to use credit cards also highlights the fact that most people aren’t equipped to handle unexpected costs. Whether it’s a medical emergency or job loss, many Americans simply don’t have enough money saved up to carry them through these types of situations. Roughly 1 in 3 Americans say they could not cover a $2,000 emergency payment without borrowing or using their credit card.

As interest rates rise, many people don’t understand the impact

The topic of interest rates is top of mind as the Federal Reserve attempts to combat rising inflation. According to a recent Federal Reserve consumer credit report, the average APR for all current credit card accounts jumped in the second quarter of 2022. APRs for cards accruing interest rose from 16.17% in the first quarter to 16.65%.

Unfortunately, many Americans don’t fully understand the effect interest rates have on their credit card debt. Nearly 2 in 5 people (37%) admit to opening a credit card account without doing any background research.

To make matters worse, 27% of Americans don’t know their interest rates on their cards.

Because credit cards typically have higher interest rates than other forms of debt, people with high balances can suffer serious financial hardship. This is because the balance continues to grow if you are only making the minimum payment each month.

1 in 8 Americans report missing a credit card payment in 2022

It appears the rising cost of consumer goods is also making it difficult for some to make timely payments on their credit cards. About 1 in 8 people (12%) said they have missed a payment this year.

While this number doesn’t seem incredibly alarming, 1 in 3 Americans (35%) said they have missed a credit card payment in the last five years. Of that group, 80% missed more than one payment.

Although it’s easy to assume that a lack of organization or reckless spending is to blame for missed payments, many people say their missed payments are out of necessity.

Although 37% say they simply forgot to make a payment, others cited the following reasons for missing a payment:

  • Had to pay for food or groceries (31%)

  • Had to pay utility bills (29%)

  • Had to prioritize other forms of debt (26%)

  • Had to pay for an emergency (26%)

  • Had to pay their rent or mortgage (25%)

  • Did not have enough income to make the payment (24%)

Nonetheless, a missed credit card payment can have a serious effect on your credit score, making it difficult to navigate future financial plans. The higher your credit score is, the more it can suffer from even one missed payment.

Key takeaways

Credit card debt can add up quickly, especially if you’re charging all your monthly necessities. Your ability to pay it off will depend on several different factors, but it’s important to prioritize this type of debt.

While the data indicates that many people have carried credit card debt at one point or another, creating a plan to pay down your debt will help you achieve financial stability.

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