Is Your Credit Card Debt Average? And What's Average?

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Savvy consumers know that credit card debt is something to banish from your financial home if you can. But just how bad is your debt situation compared to others'?

Getting a definitive answer can be a challenge. Sources have different ways of gathering and looking at "average" credit card balances. For instance, MagnifyMoney.com recently released survey data that showed that 42.4 percent of Americans carry credit card debt:
  • $10,902: Average balance for those with credit card debt.
  • $8,864: Average credit card balance for millennials.
  • $12,026: Average credit card balance for Generation X.
Those numbers, while based on a survey of 1,435 people in April, are not far off from numbers reported by NerdWallet.com that are based on government data, including Federal Reserve statistics.
  • $7,087: Average household credit card debt.
  • $15,191: Average balance for households that have any credit card debt.
In NerdWallet's analysis, households with zero credit card debt skew the overall average lower, and households with debt skew higher because of a relatively small number of households with extremely high credit card balances.

In 2013, CreditCards.com studied average credit card debt with different variables. For example:
  • $5,047: Average balance per American adult with a credit card.
  • $2,720: Average credit card debt per U.S. adult with a credit report and a Social Security number.
  • $3,364: Debt per person for all resident American adults.
  • $7,100: Average debt per household with credit card debt.
What data is gathered is yet another reason for all these variations in average credit card debt. As mentioned, the numbers vary dramatically depending on whether or not people who have credit cards at all are included in the calculations.

Another factor is the way "credit card" is defined -- for example, whether store and gas credit cards are factored in. While those cards typically have low credit limits and balances that don't influence the overall amount of debt on a national basis, they do increase the number of people who can then be defined as "credit card" users.

Another issue is that some people charge items on their credit card and pay off the balance in full every month. But even that balance is included in statistics.

CreditCards.com asked Experian in March 2013 to separate its data:
  • $8,220: Average balance for credit cards that usually carry a balance.
  • $1,037: Average balance for credit cards that are typically paid in full each month.
Paying Off Credit Card Debt

No matter what level of credit card debt you have, you're likely to be eager to pay it down to a zero balance.

Keep in mind that while you need to have an emergency fund in the bank, you're earning minuscule interest on that money if it's in a traditional savings account. (There are better alternatives.) Even a "high-yield" savings account in 2014 pays barely 1 percent in interest, while your credit card interest rate is likely to be more than 15 percent. MagnifyMoney's survey found that 75.7 percent of people with credit card debt were paying an interest rate higher than 15 percent in April.

Some of the tried-and-true strategies to eliminate credit card debt include:
  • Use the "snowball" plan: Pay as much as you can on your lowest balance while you keep up with the minimum on all other cards. As soon as that card is paid off, apply what you've been paying plus the minimum (and more if you can) to the next highest balance, and so on until you're throwing all available funds at the last credit card.
  • Pay off your high-interest debt first: Rank your credit cards in order from the one with the highest interest to the lowest, and then apply the snowball strategy to debts in that order instead of according to the balance.
  • Use balance transfers: Eliminate interest payments while paying down your debt, but be aware of the interest rate if you don't pay off the balance in full before the 0 percent interest period expires. Typically you also need to pay a fee of 2 percent to 4 percent of the balance when you transfer the debt.
  • Cut up your cards to cut off temptation: Make sure you don't use your credit cards and build up the balance again. But don't close the accounts; that can hurt your credit score. Keep one card available for a true emergency.
Accruing too much credit card debt is a lot easier than eliminating it, but you'll find it much easier to save toward other goals if you stop sending your paycheck to the credit card companies. Plus, when it comes to credit card debt, it feels a lot better to be way below average.

Michele Lerner is a Motley Fool contributing writer.

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5 Comments

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Brian Sun

Great article! I am using Credit Sesame to improve my score. Are others using CS too?

July 03 2014 at 2:47 PM Report abuse rate up rate down Reply
Melissa Li

It's hard, I know from experience... but you gotta just bite the bullet and cut up your credit cards... And then work on paying off your debt... Pay off your debts as fast as you possibly can. If this means living in a crappy studio apartment and eating ramen everyday for a couple of years, do it. If you want to buy a car, get a reliable beater. Get insurance for $25/month from Insurance Panda. Forget about buying a house until your debts are paid off.
End the addiction!

June 14 2014 at 11:08 AM Report abuse rate up rate down Reply
zigitelekus

Valerie - if you pay off your credit card on time every month (like you should), the $4.99 fast food meal costs you exactly that. Also, it will get you rewards and/or cash back.

June 12 2014 at 10:47 AM Report abuse +1 rate up rate down Reply
Valerie

Nope. I'm not average, because I have no credit card debt. If I can't pay cash for whatever-it-is that I am thinking about buying --- then I don't need that item.

Consumer credit card debt numbers are in the trillions. That is another economic mess going somewhere to happen.

People absolutely need to let go of their "want it, want it, gotta have it NOW" mentality. Piling up a mountain of debt by mindlessly charging purchases and carrying balances on credit cards is crazy. Nobody ever got rich by paying high interest rates to credit card issuers.

Even fast food restaurants accept credit cards for purchases, now. (Does it get any crazier, than THAT???) A $4.99 meal of a burger and fries can end up costing you at least 20 or 30 bucks by the time you finally pay off your credit card balance. Assuming you ever do manage to pay off that balance.

June 12 2014 at 12:37 AM Report abuse +2 rate up rate down Reply
vlady1000

I normally put things on a card and pay it off for the perks. But if a larger purchase, especially from a small business, I will negotiate a lower price if I do not put it on a card and write them a check

June 11 2014 at 10:28 PM Report abuse rate up rate down Reply