Update on Wednesday, May 6, 2020
Updated April 29, 2020
Credit card balances are at all-time highs, and absent any other relief, the recent rate cuts by the Federal Reserve will do little to slow down growth in total balances that borrowers carry month to month. And while itâ€™s still too early to know for certain, the cash crunch many households are experiencing in 2020 due to the COVID-19 pandemic may mean even greater average monthly balance increases than in recent years.
Weâ€™ve updated our statistics on credit card debt in America to illustrate how much consumers are now taking on.
The above estimates only include the credit card balances of those who carry credit card debt from month to month â€” they exclude balances of those who pay in full each month.
The above figures include the credit card statement balances of all credit card users, including those who pay their bill in full each month.
In 2019, fewer accounts were paid in full than accounts with a balance carried from month to month. According to the American Bankers Association:
Delinquency rates peaked in 2009 at nearly 7%, but in 2019 delinquency rates were 2.6%, historically well below the long-term average.
Credit card debt becomes delinquent when a bank reports a missed payment to the major credit reporting bureaus. Banks typically donâ€™t report a missed payment until a person is at least 30 days late in paying. When a consumer doesnâ€™t pay for at least 90 days, the credit card balance becomes seriously delinquent. Banks are very likely to take a total loss on seriously delinquent balances.
Those with the highest credit card debts arenâ€™t necessarily the most financially insecure. According to the 2016 Survey of Consumer Finances (the most recent data available), the top 10% of income earners who carried credit card debt had nearly twice as much debt than the average borrower.
However, people with lower incomes have more burdensome credit card debt loads. Consumers in the lowest earning quintile had an average credit card debt of $2,100. However, their debt-to-income ratio was 13.9%. On the high end, earners in the top decile had an average of $12,500 in credit card debt, though their debt-to-income ratio was just 4.8%.
A look at American incomes and credit card debt
|Income percentile||Median income||Average credit card debt||Credit card debt-to-income ratio|
Source: 2016 Survey of Consumer Finances data
Although high-income earners have more manageable credit card debt loads on average, they arenâ€™t taking steps to pay off the debt faster than lower-income debt carriers. If an economic recession leads to job losses at all wage levels, we could see high levels of credit card debt in default.
In Q2 2019, Generation X cardholders had the highest credit card balances. The average cardholder from this generation had a balance of $8,215, according to Experian. Baby boomers held an average balance of $6,949, comparatively.
At the other end of the spectrum, millennials â€” who are often characterized as frivolous spenders â€” held significantly lower credit card balances, at $4,889. They also carry fewer (3.2) of credit cards in their wallets. Generation X carry 4.3 credit cards and baby boomers have 4.8 credit cards, on average.
Using data from Experian, as well as data from the Federal Reserve Bank of New York Consumer Credit Panel and Equifax, you can compare average credit card balances by state.
In 2019, Generation X had more credit card debt, on average, than baby boomers, as those in their mid-40s typically have the largest amount of expenses relative to both younger and older consumers.
In February 2020, MagnifyMoney collected and analyzed credit card data from government and industry sources, including the American Bankers Association, Federal Reserve, the Federal Deposit Insurance Corp., Experian, TransUnion and Equifax, to determine average credit card balances, interest rates, usage and delinquency rates.