How much credit card debt Americans hold by age
Americans now hold a record amount of credit card debt, with figures from the Federal Reserve Bank’s latest data indicating nearly $988 billion owed. The increasing cost of living, coupled with the COVID-19 pandemic, has pushed many consumers to rely on credit to manage their budgets, leading to what is now a record high for credit card debt. According to TransUnion’s latest report, the average U.S. consumer carries around $5,733 in credit card debt. However, those between 40 and 49 years of age carry an average debt of $7,600, making them the age group with the highest credit card debt.
As interest rates continue to rise, credit card debt is getting more expensive, with rates currently hovering at around 20%, compared to an average of 16% last year. The Federal Reserve increased interest rates in an attempt to slow inflation, but the rate hikes have had an adverse effect on consumers’ ability to manage their credit card debt.
If you’re struggling with credit card debt, there are ways to take control of the situation. One popular way to tackle credit card debt is to sign up for a 0% balance transfer card. This allows you to move high-interest debt to a card with 0% interest for an introductory period of up to 21 months, helping to reduce your interest charges and enabling you to chip away at your debt.
Another useful strategy is to consolidate your credit card debt using a personal loan. This approach involves applying for a loan large enough to cover your total debt, paying off your credit card debt, and then repaying the loan at a more favorable rate. Personal loan interest rates average around 11%, but those with a good credit score can get a rate as low as 7%.
FAQs:
Q: How much credit card debt do Americans currently owe?
A: According to the Federal Reserve Bank’s data, Americans currently owe nearly $988 billion in credit card debt.
Q: What age group has the highest average credit card debt?
A: Those between the ages of 40 and 49 have the highest average credit card debt, with around $7,600 to their name.
Q: Why are interest rates on credit card debt rising?
A: Interest rates on credit card debt are rising due to the Federal Reserve’s decision to increase them in an attempt to slow inflation.
Q: What are some strategies for paying down credit card debt?
A: Two effective strategies for paying down credit card debt are to sign up for a 0% balance transfer card or to consolidate your credit card debt using a personal loan.
What Is the Average American Credit Card Debt by Age?
According to the Federal Reserve Bank’s latest data, Americans have a staggering $988 billion in credit card debt, which is a record number. Michele Raneri, vice president of U.S. research and consulting at TransUnion, says that “as inflation rose to near 40-year high levels, many consumers have used credit to help manage their budgets, leading to record- or near-record high balances.” TransUnion’s latest report states that Americans carry an average of $5,733 in credit card debt. However, when you break it down by age, it shows that most people carry more than that.
For instance, individuals between the ages of 40 and 49 have an average of about $7,600 in credit card debt, which is the highest among any age bracket given the expensive years they are currently living in. According to senior industry analyst Ted Rossman at Bankrate.com, “Gen Xers can be especially squeezed by credit card debt because they’re living expensive years right now. They might be sandwiched between caring for elderly parents and raising their own kids — maybe even putting them through college.” Meanwhile, the youngest credit card users between 18 and 29 years of age have around $2,900 of debt, which is understandable since most of them are new to credit cards.
Interest rates for credit cards are currently hovering above 20%, according to Bankrate’s analysis. This time last year, average credit card interest rates were around 16%. The Federal Reserve’s numerous interest rate hikes since March 2022 have been the cause of this increase. Since raising rates makes borrowing money more expensive for consumers, the Fed continued to increase them in an effort to slow inflation.
Furthermore, it can be hard to stop accumulating more credit card debt once the cycle starts. Rossman recommends using a balance transfer card, as it makes it simple to pay off credit card debt. If you want to consolidate your credit card debt, you can apply for a personal loan to cover the total debt. The average interest rate for personal loans is a little over 11% as of May 31.
Overall, Americans need to be careful with their credit card usage and be mindful of the high interest rates.