If you need help or simply more information about the credit card debt in America to see where you stand, let’s take a closer look at consumer credit card debt by demographic and proven methods to get out of credit card debt.
What is Credit Card Debt?
Credit card debt is a form of unsecured debt and is not secured by collateral. You acquire credit card debt through credit cards, which are issued by financial institutions and grant you a preset spending limit.
Credit cards allow you to make purchases and repay what you spend at a later date in small increments. The monthly payments are a small fraction of the principal and include interest.
American Credit Card Debt Average
Below are statistics that break Americans’ average credit card debt down by state, race, education level, and age.
Average Credit Card Debt by State
The average American carries credit card debt of $6,194. Here is how it breaks down by state:
- Alabama – $5,672
- Alaska – $8,026
- Arizona – $6,053
- Arkansas – $5,327
- California – $6,222
- Colorado – $6,416
- Connecticut – $7,082
- Delaware – $6,335
- District of Columbia – $7,077
- Florida – $6,460
- Georgia – $6,569
- Hawaii – $6,673
- Idaho – $5,213
- Illinois – $6,253
- Indiana – $5,254
- Iowa – $4,774
- Kansas – $5,769
- Kentucky – $5,140
- Louisiana – $5,811
- Maine – $5,442
- Maryland – $6,946
- Massachusetts – $6,213
- Michigan – $5,399
- Minnesota – $5,489
- Mississippi – $5,134
- Missouri – $5,601
- Montana – $5,482
- Nebraska – $5,423
- Nevada – $6,220
- New Hampshire – $6,235
- New Jersey – $7,084
- New Mexico – $5,851
- New York – $6,491
- North Carolina – $5,832
- North Dakota – $5,265
- Ohio – $5,560
- Oklahoma – $5,848
- Oregon – $5,498
- Pennsylvania – $5,840
- Rhode Island – $6,177
- South Carolina – $5,938
- South Dakota – $5,235
- Tennessee – $5,688
- Texas – $6,753
- Utah – $5,600
- Vermont – $5,466
- Virginia – $6,969
- Washington – $6,156
- West Virginia – $5,144
- Wisconsin – $4,961
- Wyoming – $5,782
Average Credit Card Debt by Race
Credit card debt by race is categorized as follows:
- African American – $3,800 (47.8% of the population carries a balance)
- Hispanic/Latino – $3,800 (49.6% of the population carries a balance)
- Other – $5,700 (44.1% of the population carries a balance)
- White (non-Hispanic) – $6,500 (42.1% of the population carries a balance)
Average Credit Card Debt by Education Level
Below, you will find the average amount of credit card debt per household based on the education level:
- Head of household doesn’t have a high school diploma – $3,800
- Head of household has a high school diploma – $4,600
- Head of household has some college – $4,700
- Head of household has a college degree – $8,200
Average Credit Card Debt by Age
Here’s how the average credit card debt stacks up by age:
- Silent generation – $3,177 (put age range here)
- Baby boomers – $6,043
- Generation X – $7,155
- Millennials – $4,322
- Generation Z – $1,963
How to Get Out of Credit Card Debt
Credit card debt is easy to get into, but it can take several months or even years to repay what you borrow. But with persistence and suitable debt relief options, you can chip away at those outstanding balances and get the relief you need and deserve.
Try Payment Strategies on Your Own
If you’re committed to the debt-payoff journey, here are some steps you can take to get started:
- Know what you owe. It’s challenging to devise a repayment plan for your credit card debt if you don’t know what you owe. So, the first step is to take a snapshot of your debt. Grab a notebook and note the following for each credit card: creditor’s name and contact information, current balance, credit limit, minimum payment, due date, APR, and account status (current or past due).
- Adjust your budget. If you don’t have a budget in place, now’s the time to create one that’s realistic and accounts for all your expenses. Be sure to cut any unnecessary costs to free up funds for your debt-payoff fund.
- Select a repayment method. The most common strategies are the debt snowball and avalanche methods. With the debt snowball, you first make the minimum payment on all your outstanding debts. Any remaining funds from your debt-payoff fund go to the credit card with the lowest balance until you pay it off, and you continue this pattern until all your cards have a zero balance. The debt avalanche method focuses on the credit cards with the highest balance or APR first.
- Execute the plan. The final step is to execute the program until you reach the finish line. (Quick note: if any of your credit cards are delinquent, get current before starting your debt-payoff plan to prevent further damage to your credit rating).
Get a Debt Consolidation Loan
A debt consolidation loan can help you pay off your credit cards faster and save a bundle in interest. It allows you to roll all your credit card balances into one loan with a more competitive interest rate.
You’ll make a single monthly payment towards the loan each month. Assuming the interest rate is lower, you’ll also pay off the new loan in a fraction of the time you would’ve spent only paying credit card issuers the monthly minimum payment.
Reputable lenders can help you access the funding you need to pay off your credit card debt. They offer loans between $7,500 and $50,000, and it only takes a few minutes to apply. Even better, you can receive a pre-qualified offer with no impact on your credit score.
Negotiate With Your Creditors
If you want help to pay off your debts, you can hire a company to negotiate with your creditors and settle your outstanding balances. Instead of contacting creditors on your own, an experienced member of their team will work with your creditors to negotiate a fair settlement. You will contribute to a dedicated account during the process, so you’ll have the funds on hand when it’s time to pay the creditor for the agreed-upon settlement.
FAQs About Credit Card Debt
Here are some frequently asked questions about credit card debt:
There’s no right or wrong answer to this question. However, it’s best to keep your credit utilization ratio, or the amount of credit in use, at or below 30% to protect your credit score. So, if you have three credit cards with $500 limits and you owe $100 on each, your credit utilization ratio would be 20%. You can strive for a lower credit utilization ratio to boost your credit score even higher.
You can consolidate your credit card debt by rolling all your outstanding balances into a single loan product. The idea is to find a loan that comes with a far lower interest rate so you can get an affordable monthly payment and save a bundle in interest.
A credit card debt consolidation loan can also improve your credit rating. Your credit utilization ratio will drop to zero, which helps your credit score. But it would be best if you refrained from using the cards you pay off for this to work.
If you can’t get a debt consolidation loan, another option is a balance transfer credit card. These debt products allow you to move your balances over, and there’s a promotional period where the creditor doesn’t charge interest. Be mindful that you should pay the balance in full before the promotional period ends for this approach to be effective.
Debt settlement is worth considering if you’re overwhelmed by your credit card debt and can’t get a consolidation loan or balance transfer credit card. You can hire a professional debt settlement company to negotiate on your behalf to reach a settlement that works for your budget.
When you pass away, credit card debt is generally paid from your estate. But if there’s a joint account holder on your credit card, the responsibility for the outstanding credit card debt will become their responsibility. Also, know that your credit card debt could pass on to your spouse when you die if you live in a community property state.
If your creditor deems your account uncollectible, they will write it off on their books and send it to a collection agency. Expect the debt collector to start contacting you right away, as the odds tend to be in their favor for more recent debts.
The creditor will update your account to “charge-off” status on your credit report, which usually means bad news for your credit score. A new collection could also appear on your credit soon after if you fail to request verification of the debt, dispute the debt’s validity (and win) or pay the debt collector right away.
