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Average Credit Card Debt and Statistics

Credit card debt is an unfortunate part of most Americans financial life. While this fact might be unwelcome, it’s definitely not unusual. On average, American families owe more than $15,000 in credit card debt.

The easiest solution to credit card debt is to pay off our balances and live within our means, right? Well, it might not be that simple for some. Studies show that all credit card debt isn’t a side effect of poor or irresponsible spending habits. There are many factors that contribute to the increase in debt over the past few years.

Here’s a breakdown of the major players in the rise in credit card debt.

Cost of Living

From 2003 to 2015, the household income has increased 26 percent. Unfortunately for Americans, the cost of living has significantly outpaced income growth, reaching more than 29 percent in the same 12-year timespan. With that in mind, it is easy to see how overspending can become a habitual problem, especially when purchasing the things you need like groceries or paying your rent.

Also, you might assume that the states with the most debt are also the poorest ones, but that isn’t the case. Actually, the states with the highest debts are also the wealthiest. In fact, out of the top 10 states with the lowest average credit card debt, six of them have the lowest median incomes. This is yet another example of how easy overspending has become for our society.

Another important statistic to take into consideration is that many of the states with the highest debts are also the states with the highest cost of living. Goods and services cost more in Alaska than they do in Idaho, making Alaska residents have a higher credit card debt than residents of Idaho. Debt can more easily accrue if the cost of living is significantly higher than in other areas of the U.S. (You can check out the average debt by state here.)

Availability of Credit

We all want what we can’t have. It’s a human flaw, and credit is no exception. The allure of putting the items you desire but can’t afford on a credit card is strong and almost irresistible when offered on a silver platter (i.e. no annual fees and interest-free for so many months). But this silver platter is one of the main factors in the rise of credit card debt among American families.

With the ease of attaining multiple credit cards, the opportunity to build more debt increases. According to a study by the Federal Reserve Bank of Boston, available credit appears to be the driving factor of American consumers’ debt in both the short and long term. It has even been shown that states with the highest credit scores are also the states with the highest credit card debts.

Interest Rates

When the silver platter is taken away, higher interest rates are applied to the balance that was accrued during your grace period. For example, if you received 18 months interest-free spending when those 18 months are up, your outstanding balance will have an outstanding interest rate applied to it.

According to, the current national average for interest rates is 15.17 percent. This surpasses the last highest national average, which hit 15.14 percent in January 2012. Interest rates only seem to be rising, which isn’t good news for those paying off their credit cards. Whether the debt is $500 or $50,000, higher interest rates make it harder to pay off any outstanding debts.

On average, the American household is paying a total of $6,658 in interest per year. This startling statistic reinforces the need to pay off any debts and move towards a healthier future.

What Should You Do?

If you are struggling under the burden of credit card debt, the information above makes it clear that you are not alone. Bad credit isn’t always a result of irresponsible spending, and it isn’t even limited to a geographical area. Factors including interest rates, credit availability and cost of living all play a part in the increasing credit card debts across America.

For those struggling to make ends meet, it might be time to seek help. At CreditGuard of America, our certified credit counselors work with you to help you stay on track with your monthly payments and better manage your finances. They will help you set up a budget that works for your specific financial situation, so you can start your journey to a more stable financial future.

It could also be in your best interest to use a debt consolidation program, which offers a proven process for combining your various unsecured debts (like credit cards and student loans) into one manageable payment. With this program, you will work with one of the certified credit counselors mentioned above to redefine your spending habits and create a healthy budget for your future.

If you are interested in one of these options, contact us today!

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