You may be surprised at how much credit card debt the typical consumer has racked up.
Carrying an overly high credit card balance is problematic for a couple of reasons. First, the higher your balance, the more money you stand to lose to interest. Having too high a balance can also result in a higher credit utilization ratio, which could, in turn, bring down your credit score. That’s why it’s important to aim for a manageable amount of credit card debt — or, ideally, no such debt at all.
But if you do have a pile of credit card debt, you’re far from alone. The average credit card balance in the U.S. is $6,194, according to recent research by The Ascent. Still, that number doesn’t tell the whole story.
How much credit card debt do Americans really have?
While $6,194 may be the average U.S. credit card balance, the majority of people owe less than that amount. A good 52.1% of Americans owe $2,500 or less on their credit cards, and 15.5% owe between $2,500 and $5,000. Only 17.9% of Americans owe $10,000 or more on credit cards. But thanks to some larger balances, the average credit card balance works out to $6,194.
What’s your debt situation like?
Now that you know how much debt the typical American has, the question is: How do you compare? And does it really matter?
The answer to that second question should really be “no.”
Even if you’re only carrying a $5,000 credit card balance, that’s still $5,000 you’re racking up interest on day after day. And $5,000 that’s weighing down your credit score. As such, it almost doesn’t pay to compare yourself to other consumers when you should instead focus your energy on paying off the debt you’ve accrued.
How do you do that? First, cut back on spending to free up some money for debt payoff purposes. You can also try getting a second job to give yourself more money to work with. Or, try a combination of both.
From there, take a look at your credit card debt and see how it’s spread out. Are you carrying a balance on multiple cards or on a single card? If you’re dealing with one card only, your next step is simple: Work on chipping away at that card until your balance is paid off. If you’re carrying a balance on more than one card, start by paying off the one with the highest interest rate, and work your way downward from there.
You can also try transferring your different balances onto a single card — ideally, one with a 0% introductory rate — and paying that one card off as your financial situation allows. Or look into other forms of debt consolidation to see if you can reduce the interest you are paying.
The sooner you get rid of your credit card debt, the more financially healthy you’ll be. It may be a comfort to know that you have less debt than the average consumer, unless of course, you’re bemoaning the fact that your debt load is higher. But your ultimate goal should be to shake that credit card balance — and stop throwing away money on interest when you could put it to much better use.