U.S. Household Credit Card Debt Continues to Grow

Kat Tretina

June 19, 2019  •  3 Minute Read

Credit Cards

Credit cards can be excellent tools — they’re convenient, and you can earn valuable rewards like cash back or airline miles. However, credit cards can cause problems, too. If used incorrectly, credit cards can lead you into debt.

With sky-high interest rates, it can be difficult to dig your way out of credit card debt. If you’re struggling with high credit card balances, you’re not alone; it’s a nationwide problem.

Total U.S. credit card debt

According to Experian, credit card debt has reached an all-time high in the United States. Over the past five years, total credit card debt in the U.S. has increased by 29%, reaching $807 billion in the first quarter of 2019. On average, Americans have four credit cards and have a balance of $6,028.

States with the most credit card debt

Where you live can have an impact on your credit card use and your debt. Alaska is the state with the highest average amount of credit card debt, with cardholders carrying a balance of $7,726. Iowa has the lowest average credit card debt, with just $4,622.

Why credit card debt is so high

Why has it gotten so bad? More and more Americans are relying on credit cards rather than cash. And, credit card APRs have reached record highs, making it difficult to dig your way out of debt.

This year, the average APR on a new credit card reached 17.73%, a new high. At such a high interest rate, it can take you years to pay down your debt.

For example, let’s say you had $6,028 in credit card debt, with an APR of 17.73%. If you had a monthly payment of $180.84 — 3% of your balance — it would take you 17 years and four months to repay your debt. Worse, you’d repay a total of $11,586.35. The high APR would cost you over $5,500.

How to reduce your credit card debt

If you have high-interest credit card debt, it can feel like you’ll never be able to dig yourself out of the hole. But don’t give up! By coming up with a plan and tackling your debt head-on, you can eliminate your credit card debt and save money.

1. Set a budget: First, write down how much money you have coming in each month, and list your monthly expenses, such as rent, utilities, car payments, and cell phone bills.

2. Cut your spending: Review your budget and your credit card statements and look for areas you can cut back, such as eating out, groceries, or clothing.

3. Boost your income: After you’ve cut as much as possible from your spending, look for ways to increase your income. You could ask for a raise at work, get a new job, or launch a side hustle to improve your earnings.

4. Pay more than the minimum: Your credit card minimum monthly payment is designed to keep you in debt for as long as possible. To get out of debt faster, try to pay more than just the minimum payment. Put whatever extra money you can find toward you credit card balance.

5. Complete a balance transfer: If your credit card has a high interest rate, you can save money and get out of debt faster by completing a balance transfer. With this approach, you move your balance to a card with 0% APR for a set period, giving you time to pay down your debt without worrying about interest charges.

Credit card debt in the United States has reached an all-time high. If you’re dealing with credit card debt yourself, don’t settle for the status quo. Sit down and review your credit card statements and come up with a plan to tackle your debt. By paying down your credit cards, you can achieve financial freedom.

If you need help managing your credit cards, check out these 10 tips on how to use a credit card responsibly.