Exploring the Depths of Credit Card Debt in the United States: Trends & Statistics of 2023
12 MIN READ
Published February 02, 2024 | Updated February 19, 2024
- As of 2023, total credit card debt in the U.S. reached unprecedented heights, with Americans racking up more than $1 trillion in debt
- Credit card utilization is trending up, especially among low-income and delinquent borrowers
- A recent survey also found that 3 in 5 Americans are in credit card debt, owing an average of $5,875 in unpaid balances.
- Most users claim inflation as the main cause of their falling into credit card debt, with poor spending habits and medical expenses also ranking highly
- Top strategies for paying off credit card debt include reprioritizing debts, debt consolidation, and debt settlement
U.S. Credit Card Debt: Trends & Statistics
Credit cards offer a way to defer payments from month to month, giving consumers more flexibility in a time of economic uncertainty. Statistics show nearly 600 million active credit card accounts in the U.S. in Quarter 2 of 2023. This averages out to be about two credit cards for every one of the approximately 332 million residents of the United States.
Credit card debt statistics serve as a crucial indicator of the nation’s overall financial health, guiding us through the complexities of consumer debt and providing a broad array of data points that offer insights into consumers’ borrowing habits. Data on credit card usage can also show repayment trends and the overall debt burden carried by the average U.S. household each month.
In this article, we’ll analyze these statistics and the valuable insights that can offer us a look into the financial well-being of the American consumer and the broader economy. By gaining a clear understanding of the financial challenges faced by the 134 million consumer households pumping trillions into our financial system each year, policymakers and consumers can work together to create a healthier financial environment.
Credit Card Debt Statistics in the U.S.
The amount, source, and structure of credit card debt can greatly influence consumer spending patterns in any country’s economy. While credit cards and lines of credit are more freely available here than in any other country on Earth, extremely high levels of debt may restrict U.S. consumers' ability to make significant purchases or investments, contributing to fluctuations in overall spending.
Understanding these patterns is essential for businesses, policymakers, and economists to anticipate economic trends and implement appropriate policies that smooth out the highs and lows wherever possible.
Key Credit Card Debt Statistics for America
Here are our top findings about credit card debt in the U.S.:
As of 2023, total credit card debt in the United States reached unprecedented heights. Americans have racked up more than $1 trillion in credit card debt, according to data from the Federal Reserve Bank of New York.
After hovering just under a trillion dollars for the last five years, this post-pandemic, stimulus-inspired level represents a new historic high. Our total collective credit card debt as a nation is now $152 billion higher than the previous record from the fourth quarter of 2019, when balances stood at $927 billion. This record-breaking amount underscores the pervasive reliance on credit cards and the financial tightrope many Americans are walking.
Across the U.S., 82% of adults have at least one credit card in their wallets. With the persistent economic uncertainty following the COVID-19 pandemic, consumers are more likely to use credit for everyday essentials and carry a balance from month to month.
In fact, in 2022, consumers showed the sharpest rise in credit card delinquency from the previous year. Those aged 18-29 accounted for the most dramatic increase at over 9% of the total balance.
Credit Card Balances and Utilization
In quarter two of 2023, average credit card balances rose to $6,365 per account holder, up 11.7% from the previous year.
Credit card utilization was also up in 2023, especially among low-income and delinquent borrowers, nearly at 90%. Most credit counselors and financial advisors recommend keeping your total utilization rate, which includes all your credit cards as a whole, below 30% in order to keep your FICO credit score from dropping below the generally accepted “good” score of 680 or higher.
Your Credit Utilization Rate and Why It’s Important
Credit card utilization rate, expressed in a ratio or percentage, measures the total amount of your available credit lines that you are using at any given time. This statistic is considered one of the primary ways that an existing or potential lender assesses how much (or how little) you use this kind of high-rate unsecured debt when managing your personal finances.
Your utilization ratio is extremely important because it accounts for up to 30% of your credit score. The only factor that is weighted heavier in the calculation of your FICO credit score is how often you pay your bills on time (which accounts for up to 35% of your total score).
This rate is calculated by adding the total outstanding balances on all your credit accounts and dividing that dollar figure by the total sum of the credit limits you have available on all of these same accounts.
For example, if you’re carrying a total of $10,000 in balances on all your credit accounts, and the total sum of the credit limits you have on each of these same accounts is $40,000, your credit utilization ratio will be: ($10,000 / $40,000) = 25%.
This is considered a “good” credit utilization ratio because you’re only using 25% of the total credit that is available to you. On the other hand, someone with a credit utilization ratio of 85% would be considered a “high-risk” borrower because an elevated ratio means you are using nearly all of the available credit that lenders are willing to extend to you. This is generally seen as a sign of financial stress because you are using a high-interest (high-cost) form of debt to finance your normal spending as a supplement to (or replacement for) your normal income. High credit utilization usually results in a lower FICO score.
If you’re trying to build a positive credit history or rebuild your credit after a spot of trouble, it’s best to keep your credit utilization ratio as low as possible by limiting how often you make large purchases on your credit cards or charging only what you can afford to pay off in full each month.
Individual Credit Card Debt Statistics
A recent survey of 1,000 U.S. credit card users found that 3 in 5 Americans are in credit card debt, owing an average of $5,875. Most users claim inflation as the main cause of their falling into credit card debt, with poor spending habits and medical expenses also ranking highly.
According to the survey, Millennials are faring much worse than other generations. About 67% of Millennials are in credit card debt, with an average balance of $6,794.
Surprisingly, 55% of individuals surveyed cited payments toward other debts as a top reason for falling into credit card debt. In addition, 23% say they go deeper into credit card debt every month, and 14% say they’ve missed a payment in 2023.
With little money in savings, many credit card users already depend on their cards for essential living expenses, such as rent, food, and utilities.
Credit Card Debt Statistics by Age Group
College Age and Adults Entering the Workforce
Credit cards often represent a double-edged sword for college students and young earners. On one hand, they offer financial flexibility, but they can also lead to detrimental debt. High interest rates, coupled with limited income, create an environment ripe for financial struggles that can extend beyond graduation.
- 42% of college students polled admitted they carried credit card debt.
- 46% say they got into credit card debt by using their cards on nonessential purchases, such as dining, shopping, and impulsive buying
- In 2023, the average consumer aged 18-26 (Gen Z) carried $3,148 in credit card balances.
Young Working Adults
After college, young working adults, typically in their 20s and 30s, grapple with the pressures of establishing their careers and managing finances. Credit card debt statistics for this group unveil the unique challenges and trends shaping their financial journey.
Key credit card debt findings for this age group include:
- Individuals aged 34 and under have an average credit card balance of $3,700.
- Around 48% of individuals under 35 carry a balance on their credit cards as part of their overall household debt.
- Not surprisingly, this group represents consumers with the least average credit card debt.
Parents and Working Professionals in Their 40s and 50s
Working adults in their 40s and 50s often shoulder the responsibilities of raising a family, navigating the delicate balance between providing for their children and issues related to their own financial well-being. In addition, since people in Generation X have had more credit experience than younger generations, and they have salaries that are often growing significantly each year, they are likely to have larger credit limits than consumers in other age groups.
Here are some of the top data points related to Gen Xers and beyond:
- An average of 52% of Americans 45–54 years old have credit card debt.
- This is the age group most likely to carry high levels of credit card debt.
- The average credit card debt for this age group is about $7,700.
Pre-Retirees in Their 60s
As individuals approach retirement, managing credit card debt becomes critical to securing a stable financial future. While average balances tend to slacken a little as working adults get closer to retiring, many still carry a heavy debt burden.
Here are the top statistics for those preparing to enter retirement:
- Adults aged 55-64 carry an average of $6,900 in credit card debt.
- 47% of consumers in this age group carry credit card debt.
- For those eclipsing 65, the average debt balance rises to $7,000
Retired Americans Living on a Fixed Income
Retired Americans living on a fixed income face unique challenges in managing credit card debt. With reduced resources and the possibility of expenses for increased health concerns, retirees face additional pressure in both using and paying off credit cards.
Relevant statistics for retirees include:
- Just 28% of individuals 75 or over have debt, which is the lowest of any age group.
- Of those retirees who have credit card debt, the amount they carry each month is more than any other age group, at just over $8,100 per person.
- Debt amounts for older adults have continued a steady rise over the past two decades.
Strategies for Managing Credit Card Debt
Effectively managing credit card debt is paramount to financial well-being, especially when you’re looking at paying off $20,000 or more in credit card debt. Practical strategies can empower individuals to regain control of their finances and work towards a debt-free future.
Here are some practical tips and strategies for paying off (or paying down) your credit card debt:
Examine Your Budget to Reduce Your Spending
To help you get out of debt, it’s important to recognize the spending patterns that got you into debt. By taking a very close look at your income and regular monthly expenses (especially your discretionary purchases), you’ll identify areas where you can free up some cash flow to put toward your credit card debt.
Switch To Paying in Cash
For most purchases, especially small ones, stick to using your debit card, or cash, to make your regular daily purchases. This way, you’ll keep from letting your credit card balances climb back up again. Use your credit cards only for emergencies and save on those high-interest charges each month.
Prioritize Your Debts
If you have a “good” to “excellent” credit score, consider consolidating your credit card debt with a balance transfer offer on one of your accounts. You can also use a debt consolidation loan to reduce your interest rate, save on interest charges, and pay down your credit cards faster. Compare the APRs, balance transfer fees, and loan terms offered by different financial institutions so you can find one with the lowest rates.
Consider Debt Settlement
If your credit card debt is simply too large for any of the above methods, consider debt settlement, where a debt relief organization can help you negotiate with your creditors to pay less than what you owe on your credit card balances. If you’re not sure where to start, consider enrolling your debt with experienced professionals like the team at TurboDebt, who can help you put together a plan for reducing your debt.
The Future of Credit Cards in America
It would be fair to say that credit card use is now the primary way to fund our daily lives, and as such, it will very likely continue to be a serious, major player in our financial lives. As credit cards continue to evolve, offering newer and better benefits and usable whenever and wherever products and services are sold, they’ll continue to gain a bigger share of physical space within our collective wallets, edging out the now “old-fashioned greenback,” aka the U.S. dollar bill, as the primary method of value transfer from buyer to seller.
Nowadays, businesses are making it easier than ever to use credit cards, and for that matter, debit and gift cards, as plastic replaces paper in nearly all types of transactions.
The evolution of cashless and cardless transactions via phone apps means you don’t even need to have your credit card physically with you to use it. With such an ease of free-spending at any place and any time of day or night, it’s no wonder that credit card balances are at historic highs…and rising.
As we navigate the depths of credit card debt, armed with knowledge and insights, we can work towards a future where financial well-being is within reach for all.