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US Credit Card Debt - What is the Average?

June 20, 2018 | By Daniel Dewitt

Fifty years ago, when our parents were young, very few people had credit cards. They were mostly reserved to the ranks of traveling businessmen, corporate executives and wealthy housewives. For everyone else, if you wanted to buy something you had to have the cash for it, or you didn’t buy it. But with the introduction of credit cards to the masses and their infiltration of our everyday lives, the spending power of the everyday consumer has ballooned - along with consumer debt.

Exactly how much does the average American household carry in credit card debt? How widespread is the problem? First, credit card debt refers solely to the unpaid balance on your credit card each month and doesn’t include debt you have from any other type of loan, be it personal, mortgage, or installment loan.

And the numbers on that type of debt are actually fairly clear: roughly speaking, the average American household has around $8,000 in credit card debt hanging over them, or $3,000 per adult. In total, Americans have a cumulative debt of $1.031 trillion.

How did we get to this point as a nation, and what does it mean? It’s a fair question, but one that’s more complicated to answer.

Where Does the Money Go?

There’s a stereotype that credit card debt comes from people living beyond their means and buying possessions they don’t need. And while credit card addiction is a very real problem, the vast amount of credit card debt is caused by the same thing that causes most bankruptcies: medical costs.

The majority of US households don’t have enough savings to weather emergencies of between $400-$1,000 before falling into debt to deal with it. And if you’ve ever had a stay in the hospital, you know you’re going to be charged in the thousands for even a quick visit, regardless of whether you have insurance or not. It’s one of the reasons healthcare is such a hot topic in politics these days.

How to Avoid Credit Card Debt

We’ve written before about how to establish a healthier relationship with your money, but when it comes to credit cards there are a few specific things to watch out for. The first is pretty simple: budget so you don’t overspend, and can always at least make the minimum payment eachmonth.

To create an effective budget, take your monthly net income and subtract your monthly expenses from it. From there, you simply need to make sure the first number doesn’t exceed the second. If you have difficulty making that happen, simply start cutting out monthly expenses from least vital to necessities. Creating an effective budget is the single best way to avoid joining the millions of other Americans who have credit card debt weighing them down.