America runs on credit.
A near decade of consistently increasing average credit card debt backs that up.
However, the revolving average American credit card debt actually went down in 2020. This marked the first decrease in a major consumer debt category in the past seven years.
So too dropped credit utilization rates and delinquencies.
We’re just not ourselves these days!
But will we continue this frugality trend into 2021 and beyond? Or will re-opening the economy put us back on the recent, pre-pandemic, track we were on?
Note on transactors vs. revolvers: You’ll hear these two terms being used ahead. Basically, a transactor is someone who pays off their balance each month. A revolver is someone who doesn’t, they carry a balance on their credit cards from month to month and subsequently pay interest.
Let’s start with a few interesting key stats:
- The total revolving U.S. credit card debt is roughly $965 billion
- The average U.S. household owes $8,089 in credit card debt.
- 60% of Americans carry their credit card balance month to month.
- Around 30% of Americans owe more in credit card debt than they have in emergency savings.
- 31% of credit card users never redeem their rewards
- 58.5% of young adults received their first card by the age of 20
- 44% of American students say they use their credit cards for everyday purchases
- 16% of Americans use credit cards for payments that are under $10
- As many as 30% of Americans incurred debt by charging medical expenses to their credit cards.
Why are Americans addicted to Credit Cards?
People tend to get consumed by the moment and look at credit cards as free money. Failing to realize the destruction these financial instruments can cause if not managed properly.
As someone whose parents have been in and out of credit card debt most of their lives, I can attest to the perils.
That’s not to say that there are no perceived benefits to using credit cards. Building up your credit score, convenience and various reward structures (e.g. miles) come to mind.
However, it is still important to use them with caution, if you must use them at all.
How much credit card debt does the average American have?
1. Around 190 million Americans have credit cards
(Sources: Federal Reserve Bank of Atlanta, USCB, Experian – Credit Card Debt)
According to the U.S. Census Bureau, as of 2019, there were an estimated 253 million adults in the U.S. If we combine this with the Federal Reserve Bank of Atlanta’s 2019 study, which found that 75.5% of Americans hold at least one credit card, we get over 191 million Americans with credit cards.
We sure do love our credit cards here in the States. Well, we may not love them, but we certainly use them.
Some unofficial reports even have U.S. credit card ownership at over a staggering 90% percent.
2. The total revolving US credit card debt is $965.1 billion
(Source: The Federal Reserve Consumer Credit – G.19)
After steadily increasing since 2016’s figure of $960 billion, the total outstanding revolving U.S. credit card debt has dropped back down to this ballpark, and as of January 2021, it hovers just above $965 billion according to the Fed.
This is the debt people carry over month-to-month.
For perspective, at the start of 2020, it was at $1.093 trillion. A peak not hit since the Great Recession of 2008. This trend would have most likely continued had it not been for COVID-19.
3. The average U.S. household owes $8,089 in credit card debt
(Sources: The Federal Reserve Bank of NY, Experian: State of Credit Cards, TransUnion, The Federal Reserve Report on Economic Wellbeing)
That’s the figure from the most recent Survey of Consumer Finances by the Federal Reserve. Additional survey reports allow us to break this down even further into categorized average credit card debts held by Americans:
- U.S. adults with a credit report and Social Security number owe $1,621 per credit card on average.
- $4,607 is the average debt per U.S. adult with a credit card
- $2,044 is the average balance on store credit cards.
According to Experian, there was a -14% drop in average credit card debt from 2019 to 2020.
How many Americans pay off their credit card balance each month?
4. 55% of Americans carry their credit card balance month to month
(Source: American Bankers Association)
More than half of Americans are not paying off their monthly statements in full.
Given the average adult carries a balance of almost $5,000 and the average interest rate hovers around 15%, simply making the minimum monthly payment is not a good recipe. It could take over 10 years to pay that off, and the total amount paid by the end of it all may be over $20,000.
That’s quite the price to pay, for such a small loan.
5. 27% of Americans say they carry a balance most of the time
(Source: The Federal Reserve Consumer Credit – G.19)
Almost 1-in-3 Americans have a perpetual credit card bill. These are the true ‘revolvers’ and the people credit card companies love.
For every 10% increase in their credit limit, these consumers increase their debt by 1.3% within one quarter and 9.99% in the long term. Digging themselves in, deeper and deeper.
Another 21% said they carry a balance some of the time, and 45% said they pay off their balance in full each month.
6. The average household with credit card debt pays $1,321 in interest, per year
(Source: WalletHub)
If we take the average U.S. household figure of $8,809 and apply a generous 15% interest rate to it, our average American household with revolving credit card debt may find themselves paying $1,321 in annual interest. Money that could be used for an annual vacation instead. This is after a year-over-year decrease in average credit card debt per household from 2019 to 2020.
How many Americans are delinquent on their payments?
7. 37% of Americans have maxed out their credit cards through a big purchase
(Sources: New York Fed, WalletHub)
The recent data from WalletHub reports that 24% of Americans have maxed out their credit card after making out a large purchase at least once. Another 13% reported doing so more than once.
The question only focuses on big purchases but is in line with the official 2018 survey from the New York Fed which reported roughly 50% of Americans with maxed out credit cards at the time.
8. Credit card delinquencies dropped to an all-time low during COVID
(Source: FRED)
These are the balances that haven’t seen a payment in 30, 60, or 90 days, depending on the source. Generally speaking, anything over 30 days goes into the delinquent pile.
According to the St. Lois Federal Reserve, delinquency rates on credit card loans across all commercial banks hit an all-time low of 2.02% in Q3 of 2020.
These rates peaked in 2009 at 6.77%, bottom out in 2015, and experienced a steady upwards trend until the COVID recession.
9. Gen-Z’s have the highest 90+ days delinquency rates
(Source: TransUnion)
It turns out some demographic groups miss their payment more than others. As one would expect, the younger and more carefree demographic leads the way in this category.
According to the 2018 TransUnion’s Industry Insights Report, those born in 1995 or later (Generation Z) lead the 90+ days delinquency rates, at 2.53%. Their millennial counterparts trailing closely behind them at 2.51%.
For comparison, the Baby Boomers were at 1.2%.
10. Around 27% of Americans owe more in credit card debt than they have in emergency savings
(Source: Bankrate – Credit Card Debt Survey)
Despite the global pandemic and the struggling economy, 54% of American’s reported having more emergency savings than credit card debt.
This figure is the highest it’s been since 2018 and is up 5% from 2019.
But a near 1-in-3 Americans owe more to credit card companies than they have saved up for a rainy day. That’s almost 90 million people.
Related: 20+ Average American Savings Stats You Need to See
What is the average credit card balance by State?
11. The average credit card limit is $30,365
(Source: Experian – State of Credit Cards)
According to the data from the recent State of Credit Card’s report by Experian, the average credit card limit for American’s is $30,365. Which is down $1,005 (3%) from the year before, though it is up $4,377 (16.8%) overall since 2010.
Baby Boomers have the highest average credit limit at $39,919 and the youngest generation (Gen-Z) has the lowest at $8,062.
| Generation | Average FICO Credit Score | Average Credit Limit |
|---|---|---|
| Generation Z (18 to 23) | 667 | $8,062 |
| Millennials (24 to 39) | 668 | $20,647 |
| Generation X (40 to 55) | 688 | $33,357 |
| Baby Boomers (56 to 74) | 731 | $39,919 |
| Silent Generation (75+) | 756 | $32,338 |
12. Iowa has the lowest credit card debt per person
(Source: Experian – State of Credit Cards)
Iowan’s average credit card debt dropped a cool -10% in 2020 to a national low of $4,289. They were at $4,774 in 2019.
But the biggest drop in the year-over-year average balance goes to Washington D.C., which dropped an impressive $1,406 (-20%) from $7,077 in 2019 to $5,671 in 2020.
North Dakotan’s on the other hand, saw their balances shrink the least, at -8%, though shrink it did, and that’s not such a bad thing.
13. Alaska has the highest credit card debt per person
(Source: Experian – State of Credit Cards)
Even though Alaskans dropped their per capita credit card debt down by -18% from 2019 to 2020, they are still leading the pack with an average credit card balance of $6,617. With Connecticut ($6,040), Virginia ($5,992), New Jersey ($5,987), Maryland ($5,977), and Texas ($5,849) showing similar drops in overall balances, but still filling out the top of the table.
14. The average FICO credit score in the US is 700
(Source: FICO)
Ever wonder how your credit score compares to that of your fellow Americans?
The two most widely used models to generate this comparison are Fair Isaac Corp.’s FICO Score and the VantageScore. Both give a credit score range between 300-850, and it goes without saying, the higher your score the better.
At present, the average FICO score is at 711, 5 points higher than in 2019, and 24 points higher than in 2010.
The average VantageScore is at 688.
15. 18.6% of consumers have a credit score that is in the 800-850 range
(Source: FICO)
According to the Fair Isaac Corporation (FICO), which has been tracking credit scores since 1989, 18.6% of Americans have a score in the exceptional range, a score between 800-850. Another 18.4% have a score in the 750-799 range, and 16.3% are in the 700-749 range.
However, almost 35% of Americans have a score below 650.
| Average U.S. Credit Score | % |
|---|---|
| Up to 499 | 5.8% |
| 500-549 | 8.4% |
| 550-599 | 9.8% |
| 600-649 | 10.2% |
| 650-699 | 12.7% |
| 700-749 | 16.3% |
| 750-799 | 18.4% |
| 800-850 | 18.6% |
The average American credit card debt by demographics
16. Average credit card debt by generation
(Source: Experian – State of Credit Cards)
Generation X, those aged 40 to 55, still have the highest balance, even though their average credit card debt dropped -12% from $8,171 in 2019, to $7,155 in 2020.
They carry 3.6 times more in credit card debt than Gen-Z (18 to 23 years old) and 1.6 times more than Millennials (24 to 39 years old). This is understandable, given that younger generations have low credit limits and high utilization.
| Generation | 2019 | 2020 | Change |
|---|---|---|---|
| Generation Z (18 to 23) | $2,090 | $1,963 | -6% |
| Millennials (24 to 39) | $4,845 | $4,322 | -11% |
| Generation X (40 to 55) | $8,171 | $7,155 | -12% |
| Baby Boomers (56 to 74) | $6,889 | $6,043 | -12% |
| Silent Generation (75+) | $3,776 | $3,177 | -16% |
17. 58.5% of young adults received their first card by the age of 20
(Sources: CardRates.com, The Ascent)
To obtain a credit card in the States, one must be at least 18-years old. However, those under 18 can still have a credit card with their name on it, by way of a current credit card owner making them an ‘authorized user‘. Typically, a parent giving their kid access to funds.
Furthermore, the Credit CARD Act of 2009 banned approvals for anyone under 21 unless they could prove they have sufficient income to cover their bills, or unless they had an adult co-signer.
Nevertheless, according to a survey by The Ascent, the majority of people get their first credit card early:
| Age of 1st Credit Card | % of People |
|---|---|
| Under 18 | 4.2% |
| 18 to 20 | 54.3% |
| 21 to 24 | 29.8% |
| 25 & Over | 11.8% |
18. 47.5% of American credit card holders got their first card while in college
(Source: TheAscent)
Considering the sky-high price of textbooks and their mediocre resale value, it’s no wonder American students are opening up their first line of credit during their studies. Consequently, this is also probably the riskiest time for a person to get a credit card.
Expenses can and do pile up quickly, and if you don’t have a job or parent’s financial support, you can get in debt rather quickly and get stuck with the accumulating interest.
| Education Level at Time of 1st Credit Card | % of People |
|---|---|
| In college | 47.5% |
| Post-college | 24.0% |
| Post-high school; no college | 18.8% |
| In high school | 9.8% |
19. Americans who earn less than $25,000 per year typically have $3,000 in credit card debt
(Source: TheStreet)
It appears the higher you go on the income ladder, the higher the average debt. However, those making less than $25,000 have a higher credit card debt-to-income ratio than those making double that or more.
Consider that the $3,000 debt is 12% of a $25,000 salary. Whereas someone making $115,000 with an average debt of $5,800 is looking at just 5%. Not to mention the likelihood of the ability to pay it off at any given time if it really came down to it, versus those making less than $25,000.
Take a look at the averages per income level:
| Income Level | Average Credit Card Debt |
|---|---|
| $24,999 or less | $3,000 |
| $25,000 to $44,999 | $3,900 |
| $45,000 to $69,999 | $4,900 |
| $70,000 to $114,999 | $5,800 |
| $115,000 to $159,999 | $8,300 |
| $160,000 & above | $11,200 |
20. Americans who have less than a high school diploma have the lowest average credit card debt
(Source: Debt.org)
Higher education leads to higher income, leads to higher spending. Or as a certain hip-hop artist once said, “the mo’ money we come up with, the mo’ problems we have.”
Whatever the case, the data shows a big disparity in average credit card debt between education levels.
Those with no diploma carry an average of $3,800, high-school grads carrying $4,600, those with some college at $4,700, and towering above them all are those with college degrees with an average credit card debt of $8,200.
21. The average American male has $6,357 in credit card debt
(Source: Experian – Women and Credit)
According to the data, men tend to carry a higher debt balance across all categories of debt (except for student loans), and not just credit cards. But the disparity is not always significant. As can be seen in the credit card debt figures specifically, the men stand at $6,357 and the women at $6,232.
22. Caucasian Americans have the highest average credit card debt
(Source: ValuePenguin)
Those who identify as White (of non-Hispanic origin) reported the highest average household credit card debt of any racial group, at $6,940. The average reported by this survey came in at $6,270, so this racial group was almost $700 over that figure.
23. The African-American population has the lowest average credit card debt
(Source: ValuePenguin)
According to the data, Black households carry the least amount of credit card debt with an average of $3,940, which is 37% below the national average reported in the official Federal Reserve Survey of Consumer Finances.
24. College students prefer debit cards to credit cards, but are carrying higher balances
(Sources: WalletHub, Sallie Mae)
The data shows college students preferring debit to credit.
Students holding at least one debit card as of 2018 were at 85% versus the 57% of students holding at least one credit card. That 57% figure is down 1% from 2015, but up 27% from the 2012 level of just 30% of students who reported having at least one credit card.
When it comes to carrying balances, the average has jumped 32% to $1,423, from a 2016 level of $1,076.
How are Americans using their credit cards?
25. Credit card payments make 23% of all card payments
(Source: San Francisco Federal Reserve Bank)
According to the 2019 Diary of Consumer Payment Choice from the San Francisco Fed, 23% of all payments were made using credit cards.
Debit cards were reported as the most used payment device at 28%, and cash was used in 26% of the transactions.
Interestingly enough, people under the age of 25 used cash more than any other age group.
26. 16% of Americans use credit cards for payments that are under $10
(Source: CreditCards.com)
Cash is still king. But a steadily growing percentage of Americans are making small purchases using their credit cards.
The figure jumped from 12% in 2018 to 16% in 2019, and we’ll see where it goes from here. The percentage is even higher when we zero in on the Americans who have credit cards with rewards, 26% of them say they use their card for small buys.
27. 44% of American students say they use their credit cards for everyday purchases
(Source: Sallie Mae)
Half of the students surveyed said they use their cards for online purchases, 23% said they use them for big-ticket items, and only 11% said they reserve their credit cards for emergencies. Just under half said they use their credit cards on a regular basis for day-to-day buys.
28. The average American goes $1,381 in debt for the holiday season
(Source: Magnify Money)
The holidays are for celebrating and gifting, and boy do we American’s like to gift.
So much so that about one-third (31%) of us goes into debt during the jolly season. Still, the silver lining is that fewer people borrowed than in 2019 when 44% of people incurred debt during holidays.
You can’t put a price on love though, right?
Well, according to the data, we’ve increased the amount of debt we take on to cover the holiday spending season. We’ve increased it by 40% since 2015 when we were at $986. But in 2020, despite the global pandemic, that average is at $1,381.
What are the most popular ways to finance this debt? You guessed it! Credit cards.
29. 31% of credit card users never redeem their rewards
(Sources: Bankrate: Preferred Payment Survey, NBC News)
Certain credit cards come with rewards, travel miles, points for purchases, cash-back, etc.
A rather shocking statistic is that 1-in-3 American credit cardholders failed to cash in on their rewards in 2020. Now, this very well could be due to the fact that traveling was basically nullified during the COVID pandemic.
So, how does this figure compare to previous years?
It’s actually in line with the numbers from a 2017 survey, where it stood at 31%.
30. As many as 30% of Americans incurred credit card debt by paying for medical expenses
(Sources: LendingTree, Spring Link)
When you pay for medical bills using a credit card, you risk putting yourself in more debt. But some people have no other choice.
Millions of Americans can sum up a sizeable sum of their credit card debt into two words: medical bills.
In 2019 alone, roughly 137 million Americans experienced medical financial hardships. Even more revealing is that 10% of those who reported paying a medical bill with their credit card, owe at least $10,000.
What impact the coronavirus pandemic had on these numbers will soon be determined.
How the COVID-19 pandemic affected American credit card usage?
Economically speaking, the United States entered 2020 on a very bright note. The economy was expanding and plenty of leading indicators were positive, along with overall consumer confidence. And then we, along with the rest of the world, got introduced to the global pandemic known as COVID-19.
The U.S. economy was promptly plunged into a recession and uncertainty.
However, despite this unforeseeable turn of events, American credit card debt delinquencies decreased to a historic level. People actively paid down their accounts and the percentage of balances 30, 60, and 90 days past-due, all decreased in 2020. From 2.68% all the way down to a record low of 2.02% percent in Q3 of 2020, before rising to 2.12% in Q4.
And accounts 30 to 59 days past due improved the most, as they decreased by 33% in 2020.
The average credit card debt for individual consumers also dropped in 2020, and the average balance declined in every single state. Also, credit limits dropped in 2020, as banks decreased card limits for 34% of consumers during the crisis, to mitigate potential losses.
In fact, the average credit card balances of Americans decreased by 14% in 2020.
Credit utilization, the percent of available credit a consumer is carrying or using, also decreased by 5%, going from 30% to 25%.
How is all this possible? After all, the pandemic negatively impacted millions of Americans, and unemployment skyrocketed. So why did these numbers drop?
The decreases are generally attributed to reduced spending during lockdowns and the ability to pay down balances with stimulus checks and supplemental unemployment money.
None of this is to say that the average American’s finances are withstanding the impact of the COVID recession unfettered. We’ll just have to wait and see what the end result of it all will be.
Related: 40+ Stats Highlighting the Growth of Digital Banking
Note on the numbers used in the article: In an effort to paint a fuller picture, the figures in this article were aggregated from numerous credible sources, who reported the results of their surveys at various points in time.
Parting Words
We hope these statistics on the average American’s credit card debt help you better understand the way Americans use (and overuse) our plastic money.
Sure, they can earn you a free flight to a sandy beach somewhere, or you can earn enough points to buy an item from a catalog. But you must remember to use them responsibly, and make an effort to pay them off each month if you can.
If you’re using credit cards to make ends meet and have no other choice, do not forget how much interest you can get stuck with, a small loan can turn into a life-sucking monster. Strive to pay the principal down as soon as possible, even if it means living like an extreme minimalist for a while.
Sources
Federal Reserve Bank of Atlanta | U.S. Census Bureau | Experian: Consumer Credit Review | Experian: State of Credit Cards | Experian: Credit Card Debt | Experian: Woman and Credit | The Federal Reserve Consumer Credit – G.19 | The Federal Reserve Bank of New York | TransUnion | The Federal Reserve Report on Economic Wellbeing | American Bankers Association | WalletHub | FRED | Bankrate: Credit Card Debt Survey | FICO | The Ascent | CardRates.com | TheStreet | Debt.org | ValuePenguin | Sallie Mae | Federal Reserve Bank of San Francisco | CreditCards.com | Magnify Money | NBC News | Bankrate: Preferred Payment Survey | LendingTree | Spring Link
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