The average person does not realize how expensive credit card debt is. Before we delve to deeply into the cost of carrying credit card debt it is important that we establish how much debt people actually have.
According to MoneyGeek.com the average person has almost $6,000.00 in credit card debt. Interestingly, people over the age of 75 have more debt than average. I say that because most people I speak with assume that younger people are more prone to run up credit card debt that older people.
Another interesting fact is that people in Alaska have the highest average debt while the residents of Iowa typically have the lowest.
Over the years credit card debt spike during economic slow downs or recessions. Some of the highest resent total credit card debt was in 2008/2009 and during Covid in 2020. The fact that credit card debt rises during recessions or economic slow downs is especially relevant right now as our economy begins to slow.
Another interesting fact is that people in the lowest income percentile’s tend to have the lowest credit card debt. I think most people assume that lower income level people would need to live of credit cards to a larger degree, yet the facts are the lower your income percentile is the lower your average credit card debt will be. The one thing however, this statistic does not take into account is the ability to pay off credit card balances. It may be true lower income people have a lower overall credit card debt, but it is also true their ability to pay off the balances and not incur the substantial interest charges by the credit card companies is less likely.
According to LendingTree.com total credit card balances increased from 1999 until the first part of 2009 at an alarming pace. From 1999 to 2009 credit card balances increased by over 82%. After that spike there was a steady decline until 2015 when the next run up started. The 2015 steady increase in credit card debt lasted until it peaked in 2020. After that we had another pull back just like we did after the 2009 run up, but it only lasted about a year before credit card balances began to move up at a rapid rate. By the end of 2022 total outstanding credit card debt was at the all time high reached in 2020. Which direction will it go from here? History would suggest it will continue up based on our slowing economy.
How much credit card debt do you have?