Americans Owe Nearly $1 Trillion in Credit Card Debt


Americans now hold a record amount of credit card debt — nearly $988 billion, according to the Federal Reserve Bank’s latest data.

“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,” Michele Raneri, vice president of U.S. research and consulting at TransUnion, said in TransUnion’s “Q1 2023 Credit Industry Insights Report.”

According to TransUnion’s most recent study, the average American has $5,733 in credit card debt. However, when broken down by age, most carry more than that.

According to TransUnion statistics provided to CNBC Make It, those between the ages of 40 and 49 had the most average credit card debt of any age cohort, at around $7,600.

“Generation Xers can be especially squeezed by credit card debt because they’re living expensive years right now,” Ted Rossman, senior industry analyst at, told CNBC in January. “They may be juggling caring for elderly parents and raising their own children — possibly even putting them through college.”

According to TransUnion data, the youngest credit card users between the ages of 18 and 29 have roughly $2,900 in debt. This is logical given that the majority of people in that age range are only starting to use credit cards.

Credit card debt is getting more expensive thanks to record high interest rates

“More people are carrying more debt, and those balances are costing them more than ever,” Rossman says on CNBC Make It.

Paying your credit card balance in full each month has grown more expensive. According to Bankrate’s May 31 report, interest rates are currently hovering just above 20%. Credit card interest rates were around 16% on average this time last year.

This is because the Federal Reserve has raised interest rates several times since March 2022. Because hiking interest rates makes borrowing money more expensive for consumers, the Fed kept raising them in an effort to limit inflation.

How to start paying down your credit card debt

Although credit card debt is frequently generated by practical factors such as emergencies or day-to-day living expenses, once the cycle begins, it can be difficult to break the cycle, according to Rossman.

If your credit card debt is becoming overwhelming, here are two debt-reduction techniques to consider.

0% balance transfer credit card

Rossman’s best credit card debt-reduction recommendation is to apply for a 0% balance transfer card.

If your card has a high annual percentage rate (APR), you can transfer that debt to a new card with a 0% APR introductory period that can last up to 21 months. This will help you to pay down your loan without paying monthly interest payments.

To create a level payment plan that you can stick to, Rossman recommends dividing the entire amount you owe by the number of months in the interest-free period.

It’s crucial to realize that not everyone qualifies for a balance transfer, and you might not be able to transfer your entire credit card amount. According to Experian, you typically need a decent to exceptional credit score to get authorized, and the likelihood of obtaining that approval decreases if your score is less than 670.

Keep an eye on any payment dates to avoid incurring late fees. Examine the balance transfer cost, which can range from 3% to 5% of the amount transferred to the new card.

Consolidate your credit card debt

According to Rossman, if you have many credit card balances, a personal loan can be a valuable kind of consolidation.

This technique entails obtaining a personal loan large enough to cover your entire debt. If you are authorized, you can immediately pay off your credit cards and then return the loan at a lower interest rate. According to Bankrate, the average interest rate for personal loans is just over 11% as of May 31.

If you have a good credit score, you may be able to secure a personal loan with an interest rate as low as 7% and repay it over five to seven years, according to Rossman.

It’s vital to understand that if you miss a payment, your credit score may suffer, and if you’ve exhausted the funds from your personal loan, you’ll need to apply for another one to acquire additional money.