Average US Credit Card Debt

Americans started 2021 with significantly better credit and lower credit card debt, on average, compared to the previous year. Despite the economic uncertainty caused by the pandemic, the average credit score increased by 1% (7 points) in 2020, according to Experian. Credit ratings have been rising steadily since the Great Recession – a total increase of 21 points over the decade – with the 2020 increase accounting for a good third of the rise.

“We have seen consumers during the pandemic who have saved a lot and started paying [debt] low,” said Beverly Harzog, credit card expert and consumer credit analyst at US News & World Report.

As credit scores rose, credit card debt plunged, falling 14% in 2020. As coronavirus vaccines began to roll out and the economy began to open up, Americans continued to pay down their debts, wiping out $49 billion in credit card balances in the first quarter of 2021.

And according to Experian’s 12th Annual State of Credit Report, the trend continued throughout the year.

Key Credit Card Debt Statistics

Here’s a look at some key credit debt statistics for 2021, according to Experian:

  • Average credit card balance: $5,525
  • Average renewable utilization rate: 25 percent
  • Average number of credit cards: 3
  • Average Retail Credit Card Balance: $1,887
  • Average delinquency rate of 60 to 89 days: 1 percent

Average Credit Card Debt by State

Despite the financial challenges posed by the pandemic, many U.S. households continued to prioritize saving and paying down debt. Here’s a look at the states with the highest and lowest average credit card debt. Alaska had the highest credit card debt at $7,089 and Mississippi had the lowest with an average credit card balance of $4,819.

States with the highest average credit card debt:

Alaska $7,089
District of Colombia $6,367
Connecticut $6,237
Hawaii $6,197
Virginia $6,189

States with the lowest average credit card debt:

Wisconsin $4,587
Iowa $4,587
Kentucky $4,772
Indiana $4,796
Mississippi $4,819

Average credit card debt by age group

According to Experian, consumers of all generations except Gen Z have seen their usage rates and credit card balances decline year over year. And while cardholders from older generations, like baby boomers and Gen Xers, have trended upward in terms of credit card balances, millennials have continued to keep their balances relatively low.

silent generation $3,821
baby boomers $6,230
Generation X $7,236
Millennials $4,569
Generation Z $2,312

Average credit card debt by race

Another key factor that plays a role in average credit card debt is the race and ethnicity of the cardholder. Despite lower credit card balances, blacks and Hispanics are less likely to be approved for credit than white and Asian Americans, according to the Federal Reserve’s May 2021 report on U.S. household economic well-being in 2020.

White, non-Hispanic $6,940
Other $6,320
Hispanic $5,510
Black, non-Hispanic $3,940

Average credit card debt by level of education

According to the same Federal Reserve household survey, higher levels of credit card debt can also arise due to increased access to credit. Cardholders who have completed higher levels of education likely earn more and qualify for higher credit limits than those with fewer or no degrees.

University diploma $7,940
Some college $6,210
Baccalaureate $4,940
No high school diploma $3,390

Average credit card debt by income level

Statistics show that credit card debt tends to increase with income. The higher your household income, the more likely you are to have a higher credit card balance due to your increased access to credit. Here’s a look at data from the Federal Reserve on the average balance of credit card debt to income.

0-19% $3,830
20-39% $4,650
40-59% $4,910
60-79% $6,990
80-89% $9,780
90-100% $12,600

Average credit card debt during the pandemic

The COVID-19 pandemic has changed the way many Americans manage their finances, including their credit cards. While many of those who suffered no economic fallout during this period used their economic stimulus money to pay off debts, others found themselves unable to cover their daily expenses.

A September 2021 online survey of 2,400 US adults by Bankrate found that 42% of consumers with credit card debt have increased the amount they owe since the pandemic began in March 2020, with 47% saying that the pandemic has pushed them into more debt. Credit experts cite a few possible triggers for this shift in spending habits. These include losing a job, leaving a job or having reduced hours to manage virtual learning for children, having to pay for daycare or having to buy equipment. equipment and technology for virtual school or work.

How do Americans get into credit card debt?

There are various reasons why one can fall into a credit debt spiral. This can happen due to poor budgeting, not keeping your credit usage low, or only making the minimum payments on your balance each month. Surprise expenses or unforeseen circumstances like divorce, illness, or sudden job loss can also lead to increased credit debt if you don’t have an emergency fund to help cushion the financial blow. .

Ways to eliminate credit card debt

Rome wasn’t built in a day – it will also take time for your credit card debt repayment strategy to pay off. With a clear budget plan and safeguards in place to prevent you from taking on even more debt, you can start eating into your balance in no time.

  • Step 1: Take stock of your current debt situation. You can’t make a plan to settle your debt if you’re not sure how much you actually owe. Check all your credit card accounts and note your balances, interest rates and payment due dates. If your interest rate is high, try calling your credit card issuer and ask for a lower rate.
  • Step 2: Calculate some numbers to determine your ideal payment. You should always aim to make at least the minimum payment on your card each month. But carrying a large balance from month to month can also cost you in the long run. Once you understand how your minimum payment fits into your budget, see if you can allocate a little more to your payment so you pay less interest over time and save a few months on your repayment schedule.
  • Step 3: Prepare for success by automating where you can. If part of the reason your debt has increased is that you’ve missed a payment here and there, set up automatic payment so you never miss a payment. If that’s not your style, set alerts or reminders on your phone or calendar app so you’ll be notified when it’s almost time for you to come in and make your payment manually.
  • Step 4: Arrange regular financial check-ins with yourself. Set up a monthly block of 30 minutes to review each of your accounts, track your progress, and make adjustments to your repayment plan. Maybe you received a bonus during the month and feel comfortable paying a little extra, or you had an unexpected emergency and can only make the minimum payment this month. Either way, just make sure your budget gives you the green light, then adjust it accordingly.

The bottom line

There are so many factors that play a role in how much credit card debt you carry and your ability to pay it off quickly. But it’s important to try to make it a top priority, because how you manage your credit could determine how much access you have to it in the future. If you are deeply in debt, don’t let it continue to grow. Sit down and make a plan to pay it back ASAP.

Julio V. Miller