How Bad is Credit Card Debt in America? (And How To Get Out of It)

credit card debt in america
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In a world where convenience and flexibility reign supreme, credit cards have become the primary financial tool many Americans would wield. Like any tool, however, they have positive and negative sides, depending on how you manage them. 

The current state of credit card debt in America is cause for concern, with the numbers painting a worrisome picture of financial well-being—as of the second quarter of 2023, the total amounts to $1.031 trillion.

In this article, you will learn about the issue of balance dues in the United States, including an analysis of the current situation and practical strategies for controlling credit card debt.

Credit Card Debt in America: 5 Statistics at a Glance

Before diving into the credit card debt in America, here are some statistics that underscore the gravity of the situation. These figures from the TransUnion Q2 2023 Credit Industry Insights Report offer a view into the evolving landscape of credit card usage and its implications.

  1. A substantial 50% of Gen Z consumers plan to seek new credit or refinance existing credit in the coming year, compared to 32% for the entire population. This number significantly increased from the 41% reported in July 2022.
  2. Bankcard balances reached an all-time high of $963 billion in Q2 2023, surging by 17.4% compared to the previous year.
  3. The number of cards held per consumer rose to 2.9 in Q2 2023, with the average balance per consumer hitting $5,947—the highest in a decade.
  4. The average credit limit per consumer peaked at $24.9K in the second quarter, showing a year-over-year growth of 6.4%.
  5. Past due consumer level bankcard delinquency of 90+ days stood at 2.06% in Q2 2023, a rise from 1.57% in Q2 2022. However, there was a quarter-over-quarter decline of 20 basis points, signaling a slight improvement.

These current credit card statistics reveal trends in consumer behavior, debt accumulation, and delinquency rates. As these insights unfold, it’s evident that understanding and managing credit card debt is of paramount importance to securing one’s financial future.

How to Control Credit Card Debt

If you find yourself caught in the clutches of credit card debt, here are practical steps to help you steer toward effective wealth management and financial freedom:

Pay credit card bills on time—and pay more than the minimum!

Cultivate the habit of paying your credit card bills on time, every time. Late payments have many consequences: they can trigger late fees, penalty APRs (Annual Percentage Rates), and even impact your credit score. An unfavorable credit score can affect your ability to secure favorable loan terms, rent an apartment, or even land a job. 

Additionally, aim to pay more than the minimum amount due each month. Doing so will help reduce the principal amount of the loan, which also means that your interest payments will decrease over time.

Focus on the debt with the highest interest rate

Prioritizing the debt with the highest interest rate is often called the debt avalanche. The strategy allows you to minimize the interest you pay in the long run. By aggressively targeting high-interest debt, you’ll gradually chip away at the more financially burdensome balances.

Consolidate your debts

Consider merging your debts into a single, lower-interest loan. The approach streamlines your payments and reduces the overall interest burden. It’s a strategic move that simplifies your finances and can save you significant money.

Use financial windfalls to pay down debts

When unexpected financial windfalls come—tax refunds, bonuses, or other unexpected funds—channel them towards paying your credit card debt. Tempting as it may be to indulge, redirecting these funds toward debt reduction can make a substantial dent in your balances.

Talk to a trusted financial advisor

Amidst the complexities of credit card debt, seeking advice from a trusted financial advisor can be invaluable. 

No two financial situations are alike. A financial advisor recognizes this and tailors their advice to your specific needs. They analyze your current finances, including income, expenses, assets, and liabilities, to comprehensively understand your unique circumstances. This analysis forms the foundation for crafting a customized plan that aligns with your goals.

Taking Charge of Your Financial Future

With credit card debt in America reaching alarming heights, understanding its implications and adopting effective strategies are paramount. The statistics shed light on the growing challenges, from soaring bank card balances to increasing credit card usage.

Paying credit card bills on time, prioritizing high-interest debt, and leveraging financial windfalls are all crucial steps to handle this hurdle.

However, seeking professional guidance is a game-changer. A trusted financial advisor offers personalized insights, crafts tailored debt repayment plans, and guides you toward lasting financial stability. Their expertise allows you to make informed decisions, reinforcing your journey towards becoming debt-free.

Consider collaborating with a professional wealth coach like Tencap Wealth Coaching to ensure your financial well-being is in capable hands. With our guidance, you can be secure in knowing that a brighter financial future is within reach. 

Contact us today and get on the journey towards a more prosperous tomorrow.

Nick Carrigan
Wealth Advisor | + posts

Nick trains and develops families in creating, maintaining, and growing wealth. This includes educating clients on the science and academics of investing, comprehensive financial planning, and ongoing coaching to ensure discipline for a lifetime. Nick has seen this create incredible levels of freedom, fulfillment, and love for the families he works with.

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