10 Surprising Credit Card Debt Facts

September 16, 2018 · 6 minute read

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10 Surprising Credit Card Debt Facts

If you’re like most Americans, you love your plastic. Nearly 80% of the nation’s consumers have at least one credit card. And the average wallet packs more than three . Credit cards are appealing for many reasons: Perhaps you’re trying to rack up travel rewards or take advantage of balance transfer offers.

Maybe it’s the convenience of not carrying around loose cash when even farmer’s markets and food trucks now accept cards. Perhaps an emergency came up, and you needed to pay for an unexpected medical bill or car repair expense. Or—let’s be honest—maybe you wanted to make a major purchase when you didn’t quite have enough in your bank account.

Whatever the reason, the amount Americans charge to their credit cards annually has nearly tripled since 2000. That figure is now more than $3 trillion—each year! Those lattes, Netflix subscriptions, and online shopping purchases add up.

All of this swiping comes with a cost. Many people can’t afford to pay their balances off every month. The interest they end up owing is dramatically higher than most people expect. That makes it easy to end up in vicious cycle of mounting debt.

Here Are 10 Credit Card Statistics That Might Surprise You:

1. Nearly Half Of Americans Have Outstanding Credit Card Debt

According to the U.S. Federal Reserve, 46% of American adults have an outstanding balance on their credit cards. Of those consumers, more than 60% reported having either the same amount of debt, or more, than they had a year earlier. This suggests that carrying a balance isn’t a temporary blip for most people. Rather, once they can’t pay off their cards, that debt stays with them or grows—with a sky-high interest rate.

2. Households with Credit Card Debt Owe an Average of Nearly $6,000

American families had an average credit card balance of $5,700 in 2016, according to the Federal Reserve’s most recent survey. That average had fallen only slightly since 2013, when it was $5,900.

Related: What is the Average Credit Card Debt for a 30-Year Old?

So families generally weren’t able to reduce their credit card debt, even though the stock market improved and unemployment fell over that period. Just because this is the norm, it doesn’t mean that it’s ideal: The best-case scenario is to only charge as much you can afford to pay off in full every month.

3. It Could Take You a Decade to Pay off That $5,700 Balance

Racking up credit card debt takes much less time than getting rid of it. Let’s assume, that like the average American, you have $5,700 in credit card debt.

At the current average interest rate of 16.96%, with a $100 monthly payment, it would take you 117 months—or nearly 10 years—to pay that off. And you would have paid $5,995 in interest—more than the original amount you charged! But the more you can pay each month, the faster you’ll extinguish the debt and the more you’ll save. In this example, if you increase your monthly payment to $500, you’d pay off the debt in just over a year and only spend $563 on interest.

4. Gen Xers Have the Most Credit Card Debt

Gen Xers, the generation that includes people born between 1967 and 1981, have an average credit card balance of $7,750 . That’s much more than the generation that succeeded them, millennials, who have an average balance of $4,315. Maybe that has something to do with Gen Xers growing up in the flush ’80s and ’90s, while millennial came of age during a major recession.

Baby Boomers, born between 1947 and 1966, only have slightly less debt—$7,550 on average—than Gen Xers. Gen Zers, who were born after 1996, have the lowest average credit card balance of $2,047. No surprise, considering they haven’t had as much time to rack up charges.

Incidentally, credit scores and outstanding balances don’t always go hand in hand. Average credit scores are lower for each consecutive generation, regardless of their average credit card balance. Gen Zers, for example, have an average credit score of 634, while the Silent Generation (born before 1946) is on the opposite end of the spectrum, with an average score of 729.

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5. Among States, Alaskans Have the Highest Credit Card Debt

Residents of Alaska have the most credit card debt, with an average balance of $8,515 as of 2017. The rest of the top five states are on the East Coast: Connecticut ($7,258), Virginia ($7,161), New Jersey ($7,151) and Maryland ($7,043). The state with the least credit card debt? That honor goes to Iowa, whose residents have an average credit card balance of $5,155.

6. People Are Racking up Credit Card Debt to Pay for Higher Education

With the cost of college and graduate school skyrocketing, the majority of students take out student loans. But more than 20% of people who go into debt to pay for higher education also use credit cards as well to pay for additional costs. These individuals owe a median amount of $2,500 on their credit cards for education-related expenses. For them, going into credit card debt may be more of a necessity than a choice.

7. One-Fifth of Americans Owe More On Credit Cards Than They Have in Emergency Savings

About one in five U.S. adults have a credit card balance that is higher than the amount of money in their emergency savings accounts.

That’s sobering news. Experts recommend maintaining an emergency fund that contains three-to-six months of living expenses. This statistic suggests that, not only are a substantial share of people far behind in saving for emergencies, but they may have even less leeway to do so in the future if they face climbing credit card debt.

Another 12% of respondents in this survey said they had neither credit card debt nor emergency savings. Avoiding debt is a great start, but not having an emergency fund puts them in danger of racking up credit card debt when they encounter an unexpected and unavoidable expense.

8. The Rich Have Higher Credit Card Debt

The higher a household’s income bracket, the higher the average credit card debt they incur. For example, households with an annual income of more than $160,000 have an average of $11,200 in credit card debt.

Those who make less than $24,999 only have an average of $3,000 in debt, or nearly four times less. And for households in between, income continues to correlate with credit card balances. It’s not surprising that families with more money can afford to charge more on their credit cards. But the debt that lower-income households carry is a bigger proportion of their income. For example, $11,200 is only 7% of a $160,000 income, while $3,000 is 12% of an income of $24,999.

9. Men Have More Debt Than Women

Men have an average of $7,407 in credit card debt, while women have an average of $5,245—or 22% less. So much for the myth of women shopaholics using credit cards to fill an overflowing closet with shoes!

There are many potential reasons for this difference, but some studies have found that women are less likely to approve the use of a credit card to pay for luxuries and are less comfortable with debt.

10. There’s A Good Chance You’ll Die with Credit Card Debt

Nearly three-fourths of Americans are in debt when they die.

And 68% die with credit credit card balances—more than the share who have mortgage debt (37%) or car loans (25%) when they pass away. The average credit card balance that people leave behind is $4,531. That’s not exactly a desirable legacy. Although family members don’t generally become responsible for the debt, it may be taken out of the deceased person’s estate.

There are many reasons that Americans have so much credit card debt, from rising healthcare and educational costs, to lack of emergency savings, to a cultural consumerism that encourages people to live beyond their means. But your credit card balance doesn’t have to be a life sentence.

Now that you’re armed with these credit card facts, you can take action to get your debt under control. The first steps are to get clear on what you owe, approach your creditors to work out an affordable payment plan, and make a budget to limit your spending and plan for your credit card payments.

You can also look into taking out a personal loan to cover your credit card balance. Personal loans are not revolving debt like credit cards and could give you an end date to close out your debt. Additionally, a personal loan often has interest rates that are dramatically lower than your credit card.

Looking to get your credit card debt in check? Use a SoFi personal loan to consolidate your balances and get a lower interest rate.


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