What Is the Average Credit Card Debt in the US?
Credit card debt is a widespread issue in the United States. With more people turning to credit cards to cover living expenses, the average credit card debt in the US is at an all-time high. In this article, we dive into the numbers behind the rise of credit card debt in the US and examine what the average credit card debt is currently.
Understanding Credit Card Debt
Credit card debt is a form of unsecured loan taken out by consumers. When a consumer takes out a credit card, they’re often given a credit limit. When they make purchases with their card, they are essentially borrowing up to the amount of the credit limit and enter a debt cycle. Theoretically, a consumer could continue to make purchases through their credit card, increasing their debt to their credit limit, and be stuck paying off the debt in the future.
Signs of High Credit Card Debt
There are several signs that may suggest a consumer is taking on more credit card debt than they can handle. These include:
• Making only minimum credit card payments on a monthly basis: making only the minimum payment each month means that only a small amount of the principal loan is being paid off, and the remaining balance continues to grow.
• Paying with Credit Cards for day-to-day purchases: if a consumer is using their credit card for day-to-day purchases like food or gasoline, then they may become overwhelmed with the cost of those purchases when the credit card bill comes due.
• Taking out Cash Advances: taking out a cash advance on a credit card can be very risky. It’s a type of loan that can have very high interest rates and fees, and can quickly spiral out of control if not paid back promptly.
• Boosting up the Credit Limit: boosting up the credit limit is another sign that a consumer may be taking on more credit card debt than they can handle. Boosting up the credit limit means more available funds for spending and can quickly add to the growing debt.
Average Credit Card Debt in the US
The average credit card debt in the US is currently at an all-time high. According to the Federal Reserve, the average credit card debt per household in the US is now at an estimated $9,600. This includes both open and closed credit cards.
The Rise of Credit Card Debt in the United States
The rise of credit card debt has been a growing trend in the US over the last decade. Since the Great Recession of 2008, people have become more and more reliant on credit cards to cover their daily expenses. This has resulted in credit card debt in the US hitting a record high of $1.05 trillion in 2019.
Factors Contributing to Credit Card Debt
There are a few key factors that may be contributing to the rise of credit card debt in the US. These include:
• Financial Insecurity: with unemployment figures still high in many areas, many Americans have turned to credit cards to cover their daily expenses.
• Low Interest Rates: low-interest rates may have encouraged people to take out more credit cards. This could have lead to more debt than necessary being accrued by consumers.
• Advancing Technologies: the advent of digital wallet technologies and contactless payments have made it easier than ever for people to spend money without realizing how much they’re spending.
Ways to Tackle Credit Card Debt
If you are struggling with credit card debt, there are several measures that you can take to help you get out of debt. These include:
• Consolidating Debt: consolidating your debt into one loan or consolidating multiple monthly payments into one low-cost loan can help you manage your debt more effectively.
• Creating a Budget: creating a budget that takes into account your income, expenses, and debt payments can help you stay organized and stay on track with your payments.
• Paying off Debts with the Highest Interest Rates First: paying off the debts with the highest interest rates first can help you reduce the total amount of interest you pay over time.
• Utilizing Credit Card Balance Transfer Offers: taking advantage of credit card balance transfer offers can help you lower your interest rate and reduce your payments each month.
• Creating an Emergency Fund: creating an emergency fund can help you reduce your reliance on credit cards to cover unexpected expenses. This can help reduce the amount of debt you’re likely to incur.
Credit card debt is an issue that continues to rise in the US. By understanding the signs of potential credit card debt, ways to tackle debt, and being aware of the current average credit card debt in the US, you can stay on top of your financial situation and prevent yourself from falling into the debt cycle.
