The average credit card debt is on the rise and the U.S. average household owes a crippling amount. According to Transunion, the average credit card debt per U.S. adult is $5,525 in 2021. And for US households, the average credit card debt balance is $7,938 per Wallethub.
Another interesting stat on the average credit card debt is that over 7 million Americans have access to a credit card. In addition, the total US credit card debt outstanding is a whopping $934.8B, nearly 1 trillion dollars!
Meanwhile, Wallethub reports that the average debt per credit card that doesn't usually carry a balance is $1,154 (must equal spend).
And there are over 457 million credit cards in the US. Those are some crazy numbers!
Households in Alaska owe the most with a whopping average of $11,250 in 2020 according to WalletHub. And Hawaii ($10,987) and Virginia ($9,589) come in a close 2nd and 3rd.
Related: What Is The Average Credit Card Interest Rate?
Credit Cards Are Popular For Rewards And Convenience
When used responsibly, credit cards are convenient and a wonderful way to earn rewards. But they can be dangerous and harmful if you're reckless. How many times have you withdrawn a wad of cash only to see it disappear a few days later with little idea where it all went? Certainly don't do that with your credit cards.
I track my spending like a hawk. I use free tracking tools by Personal Capital to monitor where all my my money is going.
Furthermore, I get tons of juicy rewards points on my credit cards that really add up over time.
I've used credit card rewards to fly for free to great places like Hawaii and Europe and more. The best credit cards today truly have some fantastic cash back programs and rewards.
Differences In The Average Credit Card Debt Reported
Now let's get back to the average credit card debt figures. ValuePenguin lists the average credit card debt per household at $5,700 and at $9,333 for average balance-carrying households.
According to TransUnion, the average credit card balance per consumer was $5,236 in 2Q2020 and $5,554 in 1Q2019.
Meanwhile, CNBC reports that only 10% of Americans have a monthly average credit card balance over $5,000.
Depends How You Slice It
So you can see that it's hard to figure out what's the right number when it comes to the average credit card debt per household and per consumer.
The figures vary a lot by source and by how the data is sliced and diced. One way to finding a better average credit card debt and spend number is to simply get more datapoints with a short four question survey below.
The impact on the amount of average revolving credit card debt per household is largely determined by income. You might have an astounding $15,000 in revolving credit card debt, but if you are making $1 million a year, who cares?
The more pertinent measure is average revolving monthly credit card debt to average monthly gross income.
What's confusing is that it's unclear whether people who pay off their credit card bills every month are also included in the average credit card debt per household by each source. After all, when I charge something on my card, I have interest free debt for 28-31 days, depending on the month, until I pay the bill off in full.
The solution is to simply calculate the average credit card spend a month to the average monthly gross income, and calculate the average revolving credit card debt a month to the average monthly gross income to get a more thorough picture.
My Average Credit Card Monthly Expenditure
I logged on to my credit card account to see how much I've been spending the past four months and here's what I found:
May – $3,001 (had to buy a new oven)
April – $1,940
March – $1,709
Feb – $1,910
My average monthly credit card expenditure between three cards is therefore $2,140 for the past four months.
I'm probably going to spend another $3,000 in the coming months for a trip to London. But, a lot of those expenses are going on my Chase Ink Business Cash corporate card given I'll be meeting several business partners.
$2,140 compares favorably to all the figures above for the average credit card debt per household of over $5200.
My average revolving credit card debt a month is $0 because I pay it off every month instead of paying for the usurious 17%+ rates.
I recommend you check out The Average Net Worth For The Above Average Person to inspire you to reduce spending and increase saving. And check out my Top Financial Products recommendations while you're at it.
The Median Household Income
On the income side, my monthly gross income is more than $10,000 with the combination of passive income, entrepreneurial income, and tennis coaching income.
Hence, my ratio for credit card spend to income is less than 21.4% ($2,140 / $10,000). And given my credit card spend accounts for 90% of all my expenditure excluding mortgages, and my primary mortgage debt is less than 25% of my monthly income, my savings rate is over 50%. Pretty straightforward.
My average monthly revolving credit card debt to income is 0 ($0/$10,00 = 0).
Calculate And Compare Your Own Numbers
Tabulating your monthly average credit card debt spend and average monthly revolving credit card debt and comparing it to the national average is a good exercise. Even for those will large revolving credit card debt, I'm hopeful because you generally can't have large credit card debt without a large income.
I believe the majority of folks who get into financial trouble have more of a spending problem than an income problem. Credit card spending is much more controllable than making more money as an employee given raises average 2% a year nationally and entrepreneurship is brutally difficult. Credit card expenditure, on the other hand, can swing wildly month to month.
Is there any wonder why the average American is facing a difficult retirement with the average monthly credit card debt surpassing monthly gross wages? It's impossible to save if you continuously owe more in credit card debt than you pull in a month.
Spend Less And Make More
If you can't make more money, cut spending. For those of you who can't cut spending, make more money. If you can't cut spending and can't make more money, then you are a contributor to the widening wealth gap. If you can cut spending and make more money, you're on the path to eventual financial freedom.
All is not lost however if you are carrying a balance on high interest rate credit cards. Consolidating your credit card debt onto one new 0% APR credit card through a balance transfer can help you get in control of your debt.
If you're unsure how to do that, check out this helpful guide on how to do a 0% APR credit card balance transfer and save money.
Additionally, utilizing a high rewards cash back credit card is another way to keep more money in your own pockets and out of the debt collectors hands.
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Get An Awesome Rewards Credit Card
Check out the Chase Freedom Unlimited Rewards credit card. I use my Chase credit card for all my business and travel spending to get points for more free travel, insurance in case my bags are lost or my flight is stuck, and more insurance for defective products I buy and want to return.
Everybody should have a credit card for the free 30 day credit. Just make sure to pay off your credit card every month in full!
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[…] can get away with charging 10X the risk free rate. It feels good to help borrowers save money. The average credit card debt per household is around $15,000 per the Federal […]
As e.p. and Ken were talking about in the first few comments I would be curious to see you pay your mortgage using a credit card. It seems like they were kind of dancing around the answer on how to do it…and I’ve looked into it before myself, with no results. I’d like to see what an expert like yourself could come up with, because owning three rental properties myself I could defiantly benefit from being able to throw all that onto a card and reaping the rewards!
Very interesting! Thinking about credit spending in terms of your income seems really beneficial. Just knowing how much people spend on a credit card doesn’t really tell you much until you know how much they are making. Thanks for breaking this down so clearly.
I have about $11k debt($4k left in credit limit) on the Barclay travel rewards card. I’ve had the card for 5 months now. I figure since he interest is 0% for first 12 months, just make minimum payment and then pay off when the promo is over. I did make a dumb move back in late 90s and took cash advance of $20k on two credit cards to invest in amazon and cisco stock. Made at least 6 bagger on those investments and thought I was super smart, but then got greedy and lost most of the profit on other stocks.
Oh wow.. a 6 bagger to $120K woulda been sweet if you cashed out! Gutsy. Well, no risk, no reward.
Since the interest rate is 0% for the first 12 months, might as well maximize the free loan option and pay it off by the time the grace period is over. I did that the first three years out of college, and then one time I forgot, so I never did it again.
Even if the rate is 0% the revolving balance is still reported to the credit agencies, so if you max it out you’ll have close to 100% utilization and that will destroy your credit.
My credit card bills can vary a lot, but I always pay them off in full. I like to keep my balance below $500/month, but there are months when it spikes into the thousands if I’m doing a lot of traveling. Fascinating charts!
I’d like to think that average US household debt would take out temporary, non-revolving debt. If people are using credit and charge cards responsibly, and never holding a balance month-to-month, you’re doing way better than most. I’d be curious what the true debt per household is… Or better stated, the net worth! That’s a stat that I haven’t seen much.
FSamurai,
Great post and is definitely interesting – considering we don’t know if it’s a timing issue report, etc, and what other factors are into play. Like you – I use my credit card for everything, including business expenditures with my employer as well – but pay it off in full every month. Therefore, I’m also at $0, but am I included in this study if at X date in the month of April I had $6K in outstanding debt? Always enjoy reading your articles Samurai! One thing that’s for sure – No Debt on our ends, more cash flow to invest into income producing assets! Talk and will read more soon! Thanks FS.
-Lanny, one of the dividend diplomats
I guess I am fortunate that I just have a small loan to my parents that I am paying off rather quickly (and I am also living at home with them to help them and myself out financially). I guess I am also lucky in the fact that I am already starting to pursue alternative incomes through mobile apps, Lending Club, etc while I have a full time job to reduce the stress that the business has while it is trying to grow.
Sounds like you are set. If you are OK with living with your parents, then it is awesome to save a ton of money in the process.
At one point in college I had about $12,000 in credit card debt making ~$1,000 per month. That combination was principally related to medical issues and tuition costs (due to mistakes I had made in losing my aid), but admittedly it also comprised many simple wants as well.
I don’t have any credit card debt anymore, but I still use them each month for the basics. I’m just lucky enough to be in a position to pay them off with ease in order to maintain a zero balance. It’s just time to work on my student loans next!
Gotcha. The good thing about student loans is that the interest rates are WAY cheaper than credit card debt. Furthermore, depending on your income, you should be able to write off the interest to your income.
Getting rid of my b-school loans felt amazing. A worthwhile endeavor.
The only time I carried a balance on my credit card was when I first got out of college. I let my spending get the best of me and went a little crazy. I incurred approximately $5000 in credit card debt but was only netting $2400 a month. Luckily, I was able to move in with my Dad rent free and pay that off fast.
Also, in regards to credit card reward points that pay toward mortgages balances…..Wells Fargo does this. Our credit reward points used to get automatically applied towards our principal because our loan and credit card were through them. Now that we refinanced with a different bank we aren’t able to do that.
Good to know about Wells Fargo!
I used to have a Citicard Mortgage credit card where 1% of what I spent went to principal paydown. I LOVED that card, but they cancelled it out of the blue after 5 years.
OK, Sam, I’m gonna give it to you straight. When we first acknowledged our debt load we had about over 100K of credit card debt which put us in the 76% – 100% range. We refinanced against home equity to wipe it out. It’s gonna be 6 years to wipe it out. How we got there in the first place? I gotta whole blog on that.
Wow, that’s a lot! Thanks for sharing. At least you got some good experiences and things in return yeah?
Smart to wipe out high CC interest with a lower interest GELOC. Maybe you can do a guest post about this strategy here one day?
Let me do some reading on your site now!
Your readers aren’t the average household. The results are quite good. When I first started working, I took $10,000 cash advance because it was 0% APR for a year. That was nice, but I wouldn’t do it again. I paid it off before I had to pay interest.
About 5 years ago I was in a quagmire of debt: $30,000 in credit card debt, $10,000 owed to some relatives, $9,000 to the IRS, and another $10,000 for car loan (that I was paying 17% interest on!!)
I was making around $90,000 so my debt-to-income ratio was….not good.
To correct this I implemented a very complex strategy: I sold my car, took the bus (living in LA!), ate PB&Js, and basically lived like a total loser for about 2 years.
It worked.
To you question about why I got into debt, I simply lack the discipline to have a credit card. Even after I got out of debt, my CC balance would occasionally creep up to $2,000 – $3,000/month. I had to stop using a CCs for anything other than auto-pay stuff (my cell phone and Fios bills).
I think once someone gets used to having a CC balance, they’re in big trouble. Once the CC payment becomes just another bill, the balances can really climb. When I had $25,000 in CC debt, that additional $5,000 happened quickly. I suspect the average indebted American is similar.
Great feedback dvc! The most powerful force in the world is compound interest. Not even Warren Buffet can match the returns of the average credit card interest rate for all these years!
Just imagine how much in interest all these people are paying every month to service their debt. I’m sure that amount is also staggering.
Multi-billions, that’s for sure. Hence why there are so many credit card offers. The rates are HUGE compared to the risk free rate.
Why is it you don’t use an application like mint.com to track your spending?
I’m sure Mint is great. I have just never used it because I use Personal Capital. They are more focused on cash flow and investing. I’ve already got my budget down solid for the past 10 years b/c I know what I make and know how much to spend without a problem.
I have tried using Personal Capital but felt that their budgeting tools were inadequate. I see your point that you know your own budget by heart, but when you have a family it’s a lot harder to track spending when you’re not the only one pulling out the debit / credit card. I do like Personal Capital’s investment features, but really for someone who is just putting there money into low-cost mutual funds already, I don’t feel like their advice is value added.
I’m not surprised that credit card debt is so prevalent since Chase hands out new cards like they are lollipops. I personally have about 20 credit cards (my husband does as well), and I have never been turned down for one. In fact, they actually keep increasing the credit limits as I sign up for new cards. I do it all for rewards and pay them off frequently so that I can keep a zero balance, but I can see how people get into trouble. The easy availability of credit is far too tempting for some people.
20?! How do you keep track? Spreadsheet?
We have at least 40 cards between us. I keep a simple spreadsheet that lists each card, when we signed up for it, when the annual fee kicks in (so I can cancel first), when we earned the reward, etc. It isn’t that difficult for me but it freaks my husband out to even think about it! =)
At one point I had 15, but now down to 9 cards. Only reason was is to take advantage of huge sign up bonuses. I simply don’t spend enough yearly to really rack up a decent amount of points through normal spending. So the only way I can take advantage is when i see a good offer going on for a sign up.
At least if a burglar ever enters the house, you can use them as ninja stars to scare them away!
I’m not a credit card guy, but I agree that some of the average numbers out there are not as accurate as they should be.
I would want to see, the average credit card debt by those who pay interest, then compare that with the average income of those individuals, then see what the ratio is as you mentioned.
Spend is usually about 25-30% of gross per month. I still carry a balance that has diminished over time of about 10% of my gross annual. I’ve taken advantage of offers and currently paid 1% up front for another 15 mos of zero apr. Other than the cards hanging over me I’ve preferred to divert the money to hopefully higher earning endeavors over the years. The card I use I pay in full every month and earn 2% cash back into my fidelity account. In hind sight maybe I should have used bonus money to clear my credit cards every year but lately I’d rather just earn 12% from lendingclub than pay off the cards and some low apr student loans.
There is definitely a adverse selection going on here. Most people pay off the cards, like I do, which is great.
I have a decent stash of cash, and live very frugally, let I always wonder if it will be enough. doesn’t everyone have a $1M+ net worth and pay of the cards?
I presume the data is sophisticated enough to distinguish usage and actual debt. I never could overcome the obstacle of those high interest rates to ever leave a balance. Besides, the way a balance is calculated to screw you twice! I use my card for convenience, record keeping and those great frequent flier miles.
I did know even know one was allowed to carry a balance over into the next month. So I always paid it in full! I just knew it would be trouble, plus my parents set a great example about paying off credit card debts in full every single month. An I just grew up thinking that’s what every body did. I guess I was sheltered, when a few years later after leaving home I found out peers and friends were in some deep deep debt and that it was quite normal for the average person, to carry some CC debt! I am just glad I did not learn the hard way.
Dang, sorry I told you! Reminds me of my previous firm’s corporate card spending policy per client. I thought it was $100 per head for literally 8 years, until the compliance folks told us to “remember limiting client spend to $200 a head.” Holy crap! No wonder why my expense account was always so much lower than every else’s :)
Sam, have you ever read up on how the UAE handles debt? Man, I am glad most these households that end up not paying of their debts don’t live there. For even what we consider small amounts, failure to pay can you land a prison sentence pretty quickly. Especially if you are a foreigner there living and working. Imagine if we had such strict rules in the US? Do you think people would tighten it up?
Debt (and leverage in general) actually creates value. Countries with limited access to credit see less growth from the private sector, although in some cases the growth may be more sustainable and of higher quality than the “leveraged growth” we’ve had here in the US.
Debt can amplify gains when you’re on your way up, but also creates big losses on the way down. I wonder if anyone’s ever done the research to compare societal value of credit (specifically, revolving credit)? It sure would be an interesting read…
i totally agree with you, its when those debts get out of hand or not managed correctly it becomes a problem. Also to me there is a huge difference in taking a loan and investing in real estate, than a person who is racking up CC debt on things that they do not need or help create wealth.
It also can increase general inflation in the short term. If everyone with a credit line is not responsible (i.e. letting emotions take over and not bargaining for the best price) then due to having a larger amount of cash chasing after limited goods, the price will increase, this means those without access to credit can no longer compete with those with credit and the price of the goods increase solely based on credit, not the monetary supply. Short term in that eventually everyone that will over extend themselves will and then prices must fall to meet the incoming supply of money to the over extended buyers.
Prison is certainly a good motivator to never not pay off debt!
We’d have a prison riot in America if that were to happen. “Let us get into huge debt if we choose! This is America!”
I lived in the UAE for three years. Leaving the country on legal terms was a very involved process that required you to have your bank provide your employer a statement reflecting no debt. In addition, obtaining debt is a more cumbersome in the sense that if you are an expat it requires a certified letter from your employer stating your salary and terms of employment. Overall, I actually found the whole process to be quite refreshing. With that said, the rules of debt and consequences apply much more to the expats than the locals (i.e. emirati’s). For example on the 40’th anniversary of the union of the UAE the government relieved the debt of many of the locals free and clear. Ultimately, debtors prison in the UAE only applies to non-locals.
We put everything we can on our credit card, like you, for points (basically everything but the mortgage) My credit card spend / AGI ratio is about 40%, however, over past 2.5 years we’ve had our current (southwest points) card we have paid exactly $0 in interest. But the points have paid for two round-trip vacations for the family (of four) in those same two and a half years.
philip
If only we could pay our mortgages with our rewards credit cards! Now that would be sweet.
You CAN pay your mortgage with a rewards earning credit card. Google it.
Can you specifically tell me which banks allow this so I don’t have to Google it? Be a pal!
I checked with Citi, BoA where I have mortgages and my credit cards and they said they don’t allow.
Thanks for the knowledge!
Of course a bank will never tell you that it’s possible to pay your mortgage with a CC. It takes an extra step, but it’s entirely possible. It’s how I pay my student loans with a CC each month among other things.
https://bit.ly/TCAZwi
Man, I can’t believe all my banks and credit cards are lying to me.
Can you tell me which credit card you use to pay off your mortgage at which bank? Would be much easier to get a direct answer than Googling it.
Thanks
Any CC you want. It is not fee-free however. Usually around $5 per $500 so you’re basically buying rewards points for a penny each. But if you can use a CC that bonuses spend at certain retailers you can break even or come out ahead. Buy reload card for $500+$5 fee. Load to Bluebird or Serve card. Use BB/Serve to pay your mortgage or any other bill they support. You can even pay your credit card bill to earn rewards points cheaply. The miles and points bloggers have covered it ad nauseam.
Ken is referring to manufactured spending, a technique that is becoming increasingly obsolete as businesses have become more savvy to the money they were losing through poor management. Basically, you could buy a $500 prepaid card through CVS for a ~$5 fee. The obvious problem for CVS is that they probably don’t keep the entire fee (probably only half) and they’re being charged double just to sell the card by taking your credit card. They lost money every time they sold the card…
So it was a losing proposition to begin with and there likely won’t be a way in the future to do it. The only alternative I know of is Amazon Payments (free to receive payment with credit card and any account can receive up to $1,000 per month) and if you pay yourself too many times you will get caught and your account will be locked.
I got into a little credit card debt in college, but thankfully I got a handle on the situation before it got out of control. These days I try to get 100% of my spending on my credit cards to rack up the rewards points while paying off the entire balance each month.