What is the Average Household Credit Card Debt?

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When it comes to credit card debt, especially with the passing of the CARD Act, there have been a lot of statistics flying around. I wanted to find a authoritative source, in this case the Federal Reserve, and see what the real numbers are.

One of the tricky things about averages is that it’s hard to make an apples to apples comparison. If you’re 25 and have $5,000 in credit card debt, is that good or bad? It’s certainly worse than having no credit card debt, but what if you’re responsible for providing for a family? A single person with $5,000 in debt is “worse” than a family with $5,000 in debt, all in one person’s name, right? It’s questions like these that make the whole “average credit card debt” question, and others like it, so tricky.

Despite these difficulties, it’s still valuable to understand what the average is as well as what the various trends are. If nothing else, it’s fun too right? 🙂

Average Household Credit Card Debt

The Federal Reserve publishes a Survey of Consumer Finances every three years, the last Survey of Consumer Finances was done in 2007, and is updated based on inflation data every year. According to that report, the median household credit card debt was $3,039.70 in 2007. That doesn’t seem that bad right? Well, that’s the average when you include every household, even the ones without a single credit card. In 2007, only 46.1% of households carried a balance, which is a statistic I was surprised to see given all the talk about credit card debt (that may have been changed given the economy). When you include only families with credit card debt, the mean goes up to $7,300.

The fun part about the statistics is in the “other” types of information it reveals. For example, the vast majority of credit cards are bank credit cards. Of families with credit cards, 96.1% have a bank issued credit card. 56.7% have one issued by a store, such as Macy’s. Only 11.9% have a gas credit card.

OK, that wasn’t really that interesting, but this next part is.

Average Debt by Household Income

This is the median credit card balance based on the percentile of income:

  • Less Than 20th Percentile: $855.30
  • 20th – 39.9th Percentile: $1,896.20
  • 40th – 59.9th Percentile: $2,632.20
  • 60th – 79.9th Percentile: $3,103.90
  • 80th – 89.9th Percentile: $4,573.50
  • 90th – 100th Percentile: $6,303.40

Isn’t it surprising to see that the highest earnings have the highest median credit card balance? Now before you say that high earnings are just high spenders, if you look at the median values based on percentile of net worth, you see a similar, but not quite so pronounced, trend:

  • < 25th Percentile: $3,042.40
  • 25th – 49.9th Percentile: $2,491.70
  • 50th – 74.9th Percentile: $2,843.50
  • 75th – 89.9th Percentile: $3,846.70
  • 90th – 100th Percentile: $4,999.30

The amazing part of these two statistics is that someone in the 90th to 100th percentile in income or in total net worth would still have credit card debt of just a few thousand. $5,000 – $6,500 in credit card is serious business to most people, but if you were in the 90th percentile… you would think that it’s small potatoes and something you’d get rid of just to be rid of it?

Average Debt by Age

Finally, before we go, we had to pull out the data for average credit card debt based on the age of the head of household. These results were not as surprising (to me anyway):

  • Less than 35: $3,033.70
  • 35–44: $3,277.10
  • 45–54: $3,460.70
  • 55–64: $2,939.50
  • 65–74: $2,046.30
  • 75+: $1,020.90

I love trying to guess relationships when ones probably don’t exist. I wonder if the decrease over age has to do with values about debt or concerns about retirement? I know older generations tend to shun debt and emphasize frugality, the Great Depression certainly played a role in that, but which of the competing interests dominated decision making?

Average Debt by Education

OK, OK, just one more. 🙂 This is the data based on the education of the head of household.

  • No high school diploma: $2,277.60
  • High school diploma: $2,611.90
  • Some college: $2,946.50
  • College degree: $3,873.90

The more education you have, the higher your average credit card debt! You would think that the more educated you are, the more you’d understand how credit card works but it appears another factor comes into play. As the cost of education increases, students are turning towards more student loans and relying on credit cards to help pay for things like room, board, books, and tuition. The article is from 2009 and the data is from 2007, but I still think the argument holds a measure of truth.

What did you think of all this data? Anything surprise you? Anything not surprise you?

{ 32 comments, please add your thoughts now! }

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32 Responses to “What is the Average Household Credit Card Debt?”

  1. Moneymonk says:

    “The more education you have, the higher your average credit card debt!”

    I’ve always believed that. Most college graduates are homwowners. Most homeowners tend to have more credit card debt than the average renter because homeowners purchase more large items than renters.

    • Dave says:

      Most college grads are homeowners? Where did you get this information? Sounds like BS.

    • Michael says:

      And are much more able (on average) to service that debt. My philosophy is to never have debt. If I ever did, it was strategic. I’ve never owed on a car for more than three months. I’ve looked at interest expense vs. loss of interest as well as tax considerations before I borrowed a penny…..

  2. More education = more credit card debt. Not surprising, because they think they are smart enough to make beneficial use of credit cards, as preached by all of the credit card addicts on the Internet. Alas, spending temptation > brains.

  3. lostAnnfound says:

    “I wonder if the decrease over age has to do with values about debt or concerns about retirement?”

    I think maybe it’s partly because the children have grown & moved out on their own. Less responsibility for dependents as you age. I know we have used the CC in the past because of kids. Ex: Husband out of work 4-5 years ago, kids get sick, that’s $100.00 per kid (2) for office visit because we didn’t have insurance. It went on the CC because we were living on one income and did not have an emergency fund at the time.

  4. frank says:

    You seem to be confusing “average” and “median.” They are not interchangeable.

  5. F2O says:

    I think “average credit card debt” needs to be defined. The numbers may be skewed upwards in the higher income brackets because these individuals tend to use their cards for convenience instead of using cash. I know I can run up a balance of several thousand dollars in a given month, but always pay it off before the due date. We all know that this can be deceiving on a credit report since the reporting agencies use the balance that the credit card companies give them when they report your history. Unless this report is filtering out people who do pay off their balance every month, I’m not sure one can make the assumption that higher net worth individuals(and higher earners)have higher levels of debt when it’s just as likely that it was paid back the next month.

    • athek says:

      I think this is probably why the numbers are skewed this way. We put everything on our credit card, but pay it off every month. If you were to take a snapshot of our balance, it would probably always be around $5000, but we don’t pay a cent of interest.

  6. “… but if you were in the 90th percentile… you would think that it’s small potatoes and something you’d get rid of just to be rid of it …”

    I wonder what the standard deviation is for the folks in the 90+ percentile? If each person in that range had a balance of exactly $5000, then yes, it would make sense to pay them off. But it could very well be that a handful of folks with 100K+ balances are skewing the results seriously upward.

  7. freeby50 says:

    The median of $3k and mean of $7300 are both the figures for only those families holding debt. For those figures it says: “Median value of holdings for families holding debt (thousands of dollars)” and “Mean value of holdings for families holding debt (thousands of dollars)”

    So the mean and medians for all households (including people with and without credit cards and debts) are much lower.

  8. Tyler says:

    Could one reason for the 90th percentile having higher balances be that they have, in general, better credit and therefore better interest rates.

    Carrying a balance at really low rate might not be that bad, especially if you have investments with a higher return.

  9. Neil says:

    I just don’t get credit card debt. Doesn’t make sense to me. Even for people with excellent credit scores, it’s rare to get offered a credit card with a long-term (as opposed to promotional) rate below 10%. You can invariably get a line of credit at 1/2 to 1/3 the rate of a credit card. The rate benefit is compounded by only paying interest on your shortfall, instead of your entire balance. For instance, when I was paying for my wedding, I had a $1500 shortfall for about 3 weeks, by my estimation, carrying that debt on my LoC cost about 1/12 what it would have cost on a card. That’s just dumb.

    Why is it that people – even educated people with decent incomes – are continuing to carry their debt on a card instead of a LoC?

  10. Brad says:

    It’s not really a complete picture. You must also consider savings and investments. I would not consider a broke person with no credit card debt better off than a couple with $10,000 in credit card debt, $100K in the bank, and $250,000 in retirement accounts.

    I have had credit card debt for years because I have arbitraged the balances at a much lower interest rate than my investment rate. While there is a small risk with this, my payoff has been many thousands.

  11. Marcie says:

    Don’t all of these surveys count existing credit balances that may be billed but just unpayed yet (but not overdue)? Like, I pay my credit card off every month, but if you pulled my ‘credit card debt’ on the day after it’s billed every month, it would show that I have some crazy debt. Or is that not right…

  12. NeverCarryABalance says:

    I use my credit card for everything. I pay ALL of my bills with it, I buy groceries and gas with it, I use it for discretionary spending, etc. My average balance lies anywhere from 2k-4k a month, but this amount is always paid off at the end of the month. I never carry a balance, but I have a high “average statement balance” if you look at my statement every month.

    The reason? I have a cash-back rewards card. It’s more convenient for me to use my card than to use cash, and I earn rewards for money that I would have to spend otherwise

    Do people like me, who never carry a balance but have high monthly statements, skew the results?

  13. Fairy Dust says:

    I ended up having the same thoughts/questions as F2O and Marcie – by “debt” do you mean the carryover amount that isn’t paid off every month, or just what the current balance is at any given moment whether it’s then paid off or not? We pay off every month therefore I don’t consider us to have any credit card debt, except that we do owe the credit card companies approx $1500 at the moment, but there’s money already earmarked to pay it. I just want the cc rewards 🙂

  14. latex_salesman says:

    F20 has this nailed. The more accurate measure is not ‘credit card debt’, but credit card debt older than 60 days. That’s the metric to look at.

  15. Michael says:

    The debt-by-education is interesting but the conclusion is not valid. Saying that College grads have higher debt because they used a card to pay for school would be useful if all the subjects were young adults age 21-25. For adults age 35-65, the college debt is often in the past. More education usually means more money, and higher debt levels may correlate more to increased income than usage during college years.

    Statics are interesting but analysis is the hard part.

  16. Interesting stats. Perhaps those who are older, with more education have more knowledge on how to manipulate credit cards, hence have more revolving debt.

    I just put up some similar statistics on FS, but regarding net worth. The eye opening stat is that that those with graduate degrees are 160% MORE wealthy on average than those with just bachelors degrees. Wow!

  17. freeby50 says:

    People have asked if the credit card balance amounts in the survey discussed include balances of people who pay their bill off every month. I had the same question and checked into the survey to find out.

    The survey in question is counting credit card debt that is an “outstanding balance”. The survey questions ask specifically if you pay off your bill every month and the survey asks how much was on your credit card after you made your last payment.

    The survey says:

    “(After the last payments were made, roughly what was the total balance still owed on all these accounts?/After the last payment was made, roughly what was the balance still owed on this account?)

    And one of the reports explained what they meant by credit card balances and said specifically : “Balances exclude purchases made after the most recent bill was paid.”

    So the debt figures do NOT include people who use the card regularly and pay it off every month.

  18. Patrick says:

    Interesting statistics. I’m not too surprised that college graduates have higher debt as they tend to spend more money. After constantly hearing about people living in debt, it’s surprising to see these numbers this low though.

  19. I actually thought the numbers would be higher. I buy everything with a credit card, so my balance is about $1000 to $1500 every month, but I always pay it off. I wonder if they calculate people who have balances like mine into the statistics. I never pay interest on my card since I pay it off every month and I don’t consider it to be real credit card debt.

  20. Big Brown Dad says:

    Finance is war. I am tired of losing. Business owners are getting rich because tax laws protect them. I am going to own a business. I have filed for BK. Defaulted my mortgage. I don’t want credit! I make 70k a year, wife got laid-off. When she gets a job my goal is to save what I make and live off what she makes. Success takes capital. My retirement plan at work is a joke. Draw a line in the sand !

  21. doc says:

    The author has missed the point: people of means use money to make money. I have a comfortable income, the kind that BHO would like to tax into oblivion. I go shopping for major items and I’m immeadiately offered low interest rates, often 0%. I see that as free money so I go for it. I worked with a temp who had terrible credit. She had to pay 30+% so she would have been crazy to go into debt, so she did, later filing bankruptcy. It hardly seems fair, but the more you can afford the cheaper things are. My credit card debt, used to buy a ranch, is at 0%, 1.9%, and 3.99%.

  22. wkw says:

    I wondered where you pulled the average credit card debt information data. I ask because if you were to pull a credit report for myself, I show large balances on cards that I pay off each and every month. – yes- rewards programs.

    I believe others have stated this as a comment before by Marcie and NeverCarryBalance.

    I must admit I was always shocked that charging everything might bring my score down even though I never pay interest because it is paid in full.

  23. Mr. Ivy League says:

    Man, I should never have gotten that high school and college degree! 🙂

  24. Lisa Smith says:

    I just don’t get credit card debt. Doesn’t make sense to me. Even for people with excellent credit scores, it’s rare to get offered a credit card with a long-term (as opposed to promotional) rate below 10%. You can invariably get a line of credit at 1/2 to 1/3 the rate of a credit card.I never pay interest on my card since I pay it off every month and I don’t consider it to be real credit card debt.

  25. Bob fett says:

    Is it considered credit card debt if you pay the balance off each month? For instance, we have all our energy bills, cable bill, grocery/restaurant bills etc put on a card that is paid off when the statement arrives. We incur no interest charge but do get points. So, are these national average debts revolving balances or monthly expenditures?

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