In the era of “treat yourself,” it’s easy to splurge on dinner, concert tickets, a new outfit, or a trip—just put it all on the credit card. With a credit card, spending is easy. But, if you let those charges stack up, you could be facing considerable debt. And you wouldn’t be the only one.
Consumers in the U.S. owed roughly $420.22 billion in credit card debt in late 2018 . Individually, Americans of all ages owe approximately $5,700 per person in credit card debt.
This means that many Americans are spending thousands of dollars paying interest. From August 2017 to August 2018, Americans spent $104 billion in credit card interest and fees alone.
According to a FICO® study individuals age 18 to 24 held around $2,000 in credit card debt. By the time consumers reach their late 20s, this number nearly doubles. Generally, studies have shown that the desire for credit cards increases with age.
As Americans age, their credit card debt increases too, leading to the depletion of savings, and a possible struggle to live off of retirement funds alone. Why are Americans facing more credit card debt than ever before? How can you avoid building credit card debt as you age?
Breaking down data on credit card debt by age group can help provide insight into American spending habits. How is the average credit card debt for a 30-year old different from someone in their 40s or 50s?
We’ve put this guide together to help you learn about the challenges credit card owners are facing in their 30s, 40s, and 50s—including tips for how you can pay off your credit card debt.
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Credit Card Debt Ages 35 and Under
Welcome to your 20s and early 30s, full of freedom, exploration, and for many Americans, student debt. Millennials, growing up during the Great Recession are saddled with historically high student loan debt and have the smallest average credit card debt of their fellow Americans.
Related: What is the Average Debt by Age?
The average credit card debt for those 35 and under is $5,808 . This makes sense when you consider that the age people are getting married and the age people are purchasing their first homes is increasing.
Millennials tend to be more suspicious of credit card debt—just one in three millennials carry a credit card . Millennials are also more likely than older generations to have student debt—about 41% are repaying student loans. The already heavy student loan burden could explain the hesitance to rely on credit cards.
Credit Card Debt Ages 35 to 44
Americans between 35 and 44 have on average, $8,235 in credit card debt . Many Generation X-ers have bought houses, cars, and started families. They are increasingly consuming and, as life gets busier, growing financial demands can encourage the growth of credit card debt.
As consumers are more and more stabilized in their lifestyle and careers, they tend to grow more comfortable spending money they can’t immediately repay. Additionally, those between the ages of 35 to 44 are more likely to incur medical debt and pay for those medical bills with credit cards.
According to a 2017 survey conducted by NerdWallet, 27 million adults are paying for medical expenses using credit cards, costing an average of $471 in interest per year.
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Credit Card Debt Ages 45 to 54
As of 2017, American credit card debt is peaking at the age of 45 to 54. This age group owes an average of $9,096 , as mortgages, auto loans, and children’s educational expenses typically take up an increasingly large proportion of total income.
Saving for retirement is likely to be a primary focus at this age, but with worrying about paying off debt and financing children’s educations, saving for retirement can be put on the back burner.
Credit Card Debt Ages 55+
Nearly seven in 10 Americans over the age of 55 are carrying some form of debt.
And half don’t ever expect to be debt free. The most common type of debt for individuals 55 and older is credit card debt. Getting ahead of credit card debt now becomes even more important as you near retirement. Debt can have serious consequences on a budget in retirement, especially considering retirees bring in less income.
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Ways to Pay Off Your Credit Card Debt
As you plan to pay off your credit cards, it’s important not to underestimate the challenges of your mid-to-late 30s. With growing responsibilities and increasingly complicated finances, it can be easy to fall into debt.
It’s important to organize your budget in a way that allows you to make monthly payments to reduce, and eventually eliminate debt, while still accumulating savings.
One strategy that may be worth trying is the debt snowball method, where you prioritize repayment on your debts from the debt with the smallest amount to the debt with the largest amount, regardless of their interest rates. (While still making minimum payments on all other debts, of course.)
When you pay off the debt with the smallest amount, focus the money you were spending on those payments into the debt with the next lowest balance. This method builds in small rewards, helping to give you momentum to continue making payments. This method is all about giving yourself a mental boost in order to pay off your debt faster. The idea is that the feeling of knocking out a debt balance—however small—will propel you toward paying down the next smallest balance. The con, however, is that you could end up paying more interest with the snowball method, because you’re tackling your smallest loan balance as opposed to your highest interest debt.
The other popular debt method, the avalanche method, encourages the borrower to pay off the loan with their highest interest rate first. While you don’t get that psychological boost that comes with knocking out small debts quickly, paying off your highest interest loans first is the more cost-effective solution of the two.
Another option to consider is to apply for a personal loan. Personal loans are loans that can be used for almost any purpose, whether that’s home improvement, covering unexpected medical expenses, or paying off credit card debt.
Personal loans can be a way to get ahead of debt, since interest rates are typically competitive, especially when compared to high interest credit cards. A personal loan allows you to consolidate debt—simplifying multiple monthly payments with different credit card companies into one monthly payment.
Another strategy to pay off credit card debt is, of course, to cut down on expenses and tighten your budget. When it comes to paying off debt, organization is key.
Make sure you are tracking both your income and your expenses. Take a look at your monthly purchases and try categorizing them into different areas. With some strategic planning, small changes can add up to make a big difference.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the
FTC’s website on credit.
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