How Much the Average Middle-Class Person Owes in Credit Card Debt
Many of us are taught that debt is bad and should be avoided. However, if managed properly, some types of debt can be advantageous. For instance, debt that may improve a person’s net worth or financial position can be considered “good debt.” However, any debt that’s difficult to repay or offers no long-term benefits is typically called “bad debt”.
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When it comes to bad debt, several types, like high-interest or payday loans, are difficult to repay and can worsen your financial situation. And then there’s credit card debt, which plagues a large percentage of the American population.
Credit Card Debt Statistics
Credit card debt is arguably the worst type of debt and the biggest threat to building wealth. With high interest rates and low minimum payments, you could pay on your balances for a significant part of your life.
According to Federal Reserve data, total U.S. consumer debt jumped to $17.5 trillion in the fourth quarter of 2023. Assets accounted for a large majority of this debt. For instance, mortgages accounted for $12.25 trillion. Car loans accounted for $1.5 trillion. During that same time frame, “bad” credit card debt increased by $50 billion (4.6%) to a high of $1.13 trillion. Considering pre-pandemic credit card debt was at $927 billion, per Forbes, this is a significant increase in just a few short years.
According to the consumer credit reporting company Experian, the total increase in credit card debt is attributed to a rise in the number of credit card borrowers who carry a balance on their card and an increase in retail spending.
Average Credit Card Debt by Generation
According to Experian, in the third quarter (July-September) of 2023, the average American owed $104,215 in combined mortgage, home equity line of credit (HELOC), auto loan, student loan and credit card debt. By age group, Gen X held the largest average total debt balance ($157,556), followed by millennials ($125,047) and baby boomers ($94,880).
Per that same report, Americans owe an average of $6,501 in credit card debt, with middle-aged consumers bearing the highest debt burden. The average credit card debt for Generation X (43-57) individuals was $9,123, over 40% higher than the overall average. Millennials and baby boomers had credit card debt in line with the $6,501 national average ($6,521 and $6,642, respectively).
Those who are older (the silent generation) and younger (GenZ), carry lower balances ($3,412 and $3,262 respectively) than the national average.
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This article originally appeared on GOBankingRates.com: How Much the Average Middle-Class Person Owes in Credit Card Debt
