The average credit card debt in the United States is a number that is commonly used in discussions regarding consumer debt and credit card usage. Since credit is easily and freely available, and the general American culture promotes spending, many people find themselves charging up their credit cards and accumulating huge amounts of interest. However, what is the average when the results are analyzed? Getting a clear number is challenging in various ways.
Understanding the Average Credit Card Debt First, one can find hundreds of different methods of computing an ‘average’ figure. Three common measures are:
Mean: Total credit card balance maintained on average by consumers, which is calculated from total credit card balance and number of consumers. It is influenced by a few people and organizations with the highest balances thus making the mean to be higher.
Median: The median where half of the population earns more than the other half and the other half earns less. The median is less than the mean.
Mode: The most common balance within the given sequence. When it comes to credit card debt, the mode is normally zero because the majority of consumers clear their balances every month.
Now that you know about different types of averages, which average should you focus on? Both are somewhat accurate, although balances in median and mean offer more on the state of consumer debt. Most analysts use the median, which is not skewed by large balance amounts in the same way that the mean is.
Total Outstanding Credit Card Balance According to the Federal Reserve, Americans have approximately $1. 092 trillion in total revolving consumer debt by June of this year, which is primarily composed of credit card balances. This debt is owed by approximately 179 million credit-reporting adults with cards in the United States. These numbers are sourced from the Federal Reserve Bank of New York’s Center for Microeconomic Data.
Median Credit Card Debt The average credit card debt per cardholder with a credit report is 2447 dollars in America. Therefore, a middle-class borrower has a balance of 2447 on his/ her credit cards. Once more, note that a large number of consumers have no balances that roll over from month to month. It will be noted that the average consumer has 25% credit card utilization (percentage of credit limit used on all cards).
Interest rates on credit cards Presently, the average APR or annual percentage rate for all credit card accounts is pegged at 16 to 17 percent on average. This rate has been increasing gradually side by side with the other interest rates from the Federal Reserve. Consumers attempting to reduce credit card balances are facing rising interest charges because rates are going up.
Potential variation by income and score Average balances vary significantly depending on income and credit scores. Higher-income and scores reduce average revolving utilization and a balance in dollars for people. Some segments and breakdowns:
Individuals with credit scores below 660 have an average revolving balance of around 5407. Compared with 3265 for scores ranging from 660-740 and 2322 for scores above 740. Again, as the scores increase, the interest rate reduces its value as well.
Similarly, consumers with income below 40 68 hold average credit card balances of approximately 4266. Thus, middle-income consumers owe an average of 3276. And high-income earners with income of more than 112 507 have lower median debts on cards as of 1857.
Other Demographics Even the levels of credit card debt are different depending on age education level racial characteristics and geographical location. For example:
Debt statistics show that millennials in the age bracket of 25-34 years have higher levels of debt than the other age categories. Their median balance is 3677.
Low-income and Black Hispanic households still have above-average revolving balances than that of white and Asian households. Prejudice and unfair treatment are involved.
Non-college-educated consumers have 4000 to 5000 dollars in credit card balances on average.
The states in the southern region such as Alabama, Texas, Georgia, and South Carolina have high consumer debt per capita. Western and Plains states have lower median balances in contrast – for instance Iowa $1671 only.
So even though the ‘average’ US credit card debt does give some indication of how unwell the household’s money management may be, it paints a different picture based on the person’s circumstances. Other subtenants such as senior citizens Gen Z college graduates and high earners have small or insignificant balances. Marginalized groups face higher debt levels and costs of borrowing as they are locked out of the mainstream financial system.
Analysis of Credit Card Debt Last but not least, the average numbers are not constant and vary with the trends in the economy. The balances reduce at the onset of economic downturns such as pandemic recessions before staging a steep recovery. Consumers start using revolving credit cards, which can help to compensate for the decrease in income.
Nonetheless, US credit card balances fell slightly in the early part of the pandemic due to lower spending. But they came roaring back to new record highs quickly. Consumer credit increased by 186 billion solely in the transition from 2021 to 2022 due to high inflation.
In the last recession, balances reached their highest level of 870 billion at the end of 2008. The deleveraging trend was short-lived and was reversed within a couple of years as lenders started to increase offers again. It is expected to experience a similar movement after the COVID-caused recessions.
Thus, while economists monitor trends in aggregate card debt, the “average” obscures variations across subdivisions. Income demographics of credit access education and location are some of the specific factors that determine what a consumer owes on the card. It is common for reports to focus on the median as it provides a middle-ground picture. However, the breakdowns depict a clearer picture of which groups are more or less likely to carry around credit card debts.
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