Sometimes, necessary expenses just aren’t in the budget. And when that happens, it’s often easiest to turn to credit cards to fill the gap. Over time, high APRs and increasing needs can build, leading to significant credit card debt.
If you find yourself in that situation, know that you aren’t alone: Just under half (47%) of Americans carry a balance from month to month.
Here’s how much credit card debt the average American has
The average American had $6,501 in credit card debt in Q3 of 2023, based on The Motley Fool Ascent’s analysis of data from sources like Experian, the Federal Reserve, TransUnion, and the U.S. Census Bureau.
At the same time, the average credit card APR in 2023 was a whopping 22.8%. That’s the highest these rates have been since the Federal Reserve started collecting this data back in 1994. (Since then, rates have decreased slightly, falling to 21.51% in May of 2024. But that’s still miles above the 16.26% rates seen as recently as 2022.)
So those who have the average debt at the average rate ended up paying over $13,000 in interest alone over the course of 152 months, assuming they made a 2% minimum monthly payment and didn’t add to their balance.
What to do if you have more credit card debt than the average American
If you find yourself above the average credit card debt figure, there are options to help get out of that debt. But it will take time and dedication. Here are some options you might consider.
0% APR balance transfer card
If you can qualify, a balance transfer card with a 0% APR introductory period can be a major money-saver. You would pay a balance transfer fee that’s typically 3% to 5% of the balance, but that’s often much lower than you’d pay by tackling that debt on a typical credit card APR. The key is to pay it off before the introductory period ends, since any leftover balance would be subject to the card’s go-to rate.
Personal loan
Another way to access a lower APR is a personal loan, which can have significantly lower rates than a credit card if you have good credit. Many personal loans are fee free, too, which minimizes the amount you’d have to pay to get out of credit card debt.
Debt avalanche method
If you have multiple cards, there are many ways that you can choose to attack your credit card debt — but the avalanche method can help you save the most on interest. Here, you’d order your debt by highest APR to lowest, and then put your efforts into paying off the highest rate card first, while paying the minimum amount on the other cards. Then you’d move on to the next card on your list, and so on.
Credit card debt is difficult to get out of, and it’s something many people deal with every day. But that doesn’t mean you can’t get out of credit card debt. As long as you stay consistent with payments and take advantage of the financial tools available to you, you’ll be on your way to a better financial future.
