Credit card debt can feel like a never-ending battle, with minimum payments and high interest rates making it difficult to climb out of the financial hole.
To better understand these struggles, the MarketWatch Guides team analyzed the statistics around credit cards to determine how the nation handles credit and debt. Our findings include insights into how different generations handle credit card debt, as well as how debt compares from state to state.
Finally, we’ve gathered tips on safeguarding against further debt by setting up a sound financial system – including choosing one of the best free checking accounts.
Key Findings
- The average American family’s credit card debt in 2022 was $6,120, according to the most recent Federal Reserve data.
- The average debt per capita was $3,332.80.
- Baby boomers, Generation X, and millennials carried the most credit card debt.
- Although Washington, D.C., had the highest average credit card debt per capita of $4,660, Alabama was not far behind at $4,430.
What is the Average Credit Debt?
The average credit card debt for all families was $6,120 in 2022, according to the most recent official data from the Federal Reserve.
This is significantly down from its recent peak in 2007 when credit card balances spiked to $10,490. Average debt then gradually declined to just over $7,000 in credit card balances in 2016. Despite a small bump in debt balances in 2019, credit card debt trends toward sub-$6,000 balances not seen since 1995.
However, even as credit card balances fell, balances of other lines of credit spiked to $126,690 for all families in 2022. These include personal lines of credit and other revolving loan products that large banks typically offer. That increase in credit totals over two-and-a-half times that of 2019’s figures.
Credit card delinquencies also soared past pre-2019 rates as credit utilization increased by two percentage points.
Credit Card Debt By State
Location represents one of many factors affecting how Americans spend money and utilize credit, especially when it comes to covering different costs of living. The following table demonstrates the credit card debt per capita in the last quarter of 2022 for Washington, D.C., and the 50 states:
The average national credit card debt per capita totals $3,332.80. Alabama had the highest credit card debt per capita among U.S. states at $4,430. However, Washington, D.C.’s credit card debt per capita was $230 more.
Among the top six states, credit card debt per capita exceeded $4,000. A higher cost of living could explain why Hawaii ranks third on this list, but California sits at 11th with only $3,870 credit card debt per capita. At $2,450, Missouri had the lowest credit card debt per capita.
Credit Card Debt Demographics
Baby boomers and Generation X had the highest credit card balances of over $7,500 in 2022. Millennials take second place with around $6,500 in credit card debt. Cardholders 75 and over had the lowest debt, at just under $4,000.
Among ethnicities, White, non-Hispanic populations had the highest credit card debt. Debt owed by this demographic totaled $2,500 more than Black, non-Hispanic populations. Hispanic populations owed an average of $4,150, the least credit card debt among all ethnicities.
Although couples with one or more children had the highest credit card balances (of over $7,000), credit card debt was also high among couples without children and childless singles 55 and older. Single people without children who are also under 55 had the least credit card debt. Single parents with one or more dependents had just over $5,000 in credit card debt in 2022.
College attendees and graduates accrued more credit card debt in 2022 than those with only a high school diploma. Credit card balances were lowest among those who didn’t graduate high school. These findings mirror historical trends from the past decade or so, with degree-holding cardholders maintaining the highest debt among these populations since 1989.
How To Pay Off Credit Card Debt
Setting aside money to pay off credit card debt can be difficult. However, the healthy financial habits you embrace now can propel you toward affording those same opportunities without the stress of credit card fees and interest.
Establish Healthy Banking Practices
Working smarter with your available funds begins with choosing from the best free checking accounts. You don’t have to pay to manage your money from a central hub. Next, consider opening one or more high-yield savings accounts to establish your emergency fund.
Use the Snowball or Avalanche Method
The snowball and avalanche methods represent two paths that lead to the same goal. With the snowball approach, you tackle debt from small to large amounts, but you can also move from your most significant debts to your smallest with the avalanche track. The method that motivates you most often represents the better personal choice.
Reduce Your Spending Habits
Altering your spending begins with budgeting your income. Learning how to get out of debt requires knowing where your money goes and where you can cut back. Redirect the amount you spend on luxuries to your credit card payments instead, and you might be surprised how quickly you can reduce your debt.
The Bottom Line
Many Americans struggle with credit card debt, exceedingly so with recent economic conditions. Individuals and families may lean on available credit to make ends meet, but it often requires personal dedication to financial health to climb out of debt. Taking charge of your finances can empower you and help you establish a plan to lower your credit card debt. That same approach can also help you save for your future.
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