Credit card debt is about as American as apple pie, as the saying goes. It’s very common for individuals and families to carry a balance on one or more credit cards from month to month.
Wondering how much the average American’s credit card debt is? Keep reading to learn more about what the data shows about Americans’ credit card usage and some tips for addressing this type of debt if you’re one of the many U.S. borrowers trying to bring down those balances.
By the Numbers: Average American Credit Card Debt
Depending on which source you consult, the specific amount of credit card debt held by the average American varies. Data from credit reporting bureau Experian puts credit card debt around $5,315 in 2020 — which actually represents a drop from the year before, when credit card debt exceeded $6,100.
A WalletHub survey shows the average U.S. household balance to be $8,089 in 2020, a figure that may very well rise as the financial impacts of the pandemic continue to affect borrowers.
As you can see, the exact amount of credit card debt held by the average American varies depending on the source and the method of data collection. However, the general consensus is that balance-carrying Americans tend to owe $5,000 or more on average — illustrating how commonplace it is for credit cardholders to find themselves dealing with significant debt levels.
Solutions for Reducing or Eliminating Credit Card Debt
The challenge with credit card debt in particular is that it tends to accrue interest fast. This is due to the fact that credit cards tend to have high annual percentage rates (APR) that compound daily, tacking interest charges on top of the actual amount you’ve spent.
It pays, literally, to address credit card debt before it gets out of hand. There are many ways to go about trying to decrease or get rid of this debt altogether, such as:
- Credit counseling: You can usually meet with a credit counselor for free to discuss your budget and debts, then come up with a personalized plan. Be sure to choose a reputable credit counseling agency accredited by the National Foundation for Credit Counseling.
- Debt management: Another service offered by credit counseling agencies, this three- to five-year plan will have you make a payment each month to your counselor rather than your creditors. The agency will distribute those funds on your behalf and try to negotiate better terms, like lower interest rates or canceled late fees.
- Debt settlement: If you have significant credit card debt and are already delinquent on balances, you may be able to negotiate with creditors. You can try this on your own or work through a program like Credit Associates, Freedom Debt Relief, etc.
- Debt consolidation: If your credit rating enables you to get a personal loan with lower APR than your credit card debts, you may be able to consolidate — saving you monthly effort and interest charges. Another way to consolidate is by transferring one or more current balances to a balance-transfer credit card, allowing you to pay down your balance at low or no interest for a set number of months.
- Snowball/avalanche methods: A little strategy may help you pay off your debts on your own. Rather than splitting your money evenly across all your balances, pay the minimum on each while paying as much as you can toward just one chosen balance. The snowball method would have you focus on your smallest balance on up the line; the avalanche method would have you focus on your balance with the highest interest rate on down the line.
Many Americans are carrying thousands of dollars in credit card debt. If you’re one of them, consider your options for getting out from under it sooner rather than later — you’ll save yourself stress and interest expenses.