Credit Card Debt Statistics

Credit card debt is among the most-discussed topics you’ll encounter in personal finance. When used wisely, credit cards can help build good credit scores and financial flexibility. In other cases, though, they can result in burdensome debts or open you up to the risks of credit card fraud.

We pulled together all the credit card debt statistics you need to know to understand how credit cards fit into the payment processing ecosystem. Ultimately, you’ll see how to make the most of them as a consumer or business owner.

The Average American Has Over 5,000 USD in Credit Card Debt

One of the most surprising credit card debt statistics is the fact that the average American carries a balance of 5,221 USD. This translates in outstanding debt to the tune of about USD 841 billion. However, this isn’t an all-time high. In 2019, the average balance was 6,194 USD. During the COVID-19 pandemic, many people used excess savings to pay down credit cards and other debts. While overall debt from credit cards is rising again, it’s still lower than before the pandemic.

The Average Credit Card Limit Is Over 12,000 USD

While credit limits vary widely based on credit history, income, and other factors, the average credit card issued in 2021 had a limit of 12,945 USD. This was slightly higher than the 2020 average of 12,890 USD. Median credit limits trend far lower, suggesting that these numbers are skewed upward by a small number of cards with very high limits.

The amount of credit you can access generally rises as you get older and earn more income. Getting a card with a limit of 12,000 USD or more also typically requires a high credit score and few other outstanding debts.

Older Americans Have the Most Credit Card Debt

Debt is typically associated with younger people, but older Americans carry the highest average credit card balances. Those over 75 have an average balance of about 8,100 USD, while those under 35 average about 3,700 USD.

Taking on this much credit card debt in retirement can be dangerous, particularly for those living on fixed incomes or depending on social security payments. The median income for retirees as of 2021 was 47,357 USD. This suggests that the average retiree owes almost 20 percent of their annual income to credit card companies. Among those 75 and older, these credit card debt statistics become even grimmer. The median income among this group is only 37,335 USD.

Millions of Americans Carry More Than 10,000 USD on Credit Cards

Although the average is closer to 5,000 USD, about 14 million Americans have credit card balances over 10,000 USD. In many cases, this debt is spread out among several cards. The average user in the United States has 2.7 credit cards, making it possible to take on far more debt than any single card would allow.

At this level, credit card debt can severely impede major life decisions like starting a family, buying a home, or launching a business. If you’re struggling to get a new company up and running due to personal credit issues, consider using Zenti’s Bad Credit Merchant Account service. Zenti makes it simple for business owners with bad credit to get approved for a merchant account.

Like Consumers, 53 Percent of Businesses Also Use Credit Cards

While most credit card debt statistics deal with consumer cards, it’s important to remember that businesses also lean heavily on credit cards as a source of funding. About 53 percent of businesses use credit cards, including many small businesses.

Business credit cards typically offer much higher revolving credit lines than consumer cards. These cards often carry limits of over 50,000 USD. The average balance and utilization rate among businesses also run higher than among consumers. The average balance among business credit card accounts is nearly 31,000 USD, with utilization at 35 percent. Rates also run slightly lower for business accounts, though they’re still well into double-digit territory.

In the startup phase of a business, the line between personal and business credit often gets blurry. More than 9 percent of small business owners use personal credit cards for business funding. While this practice can be somewhat risky, small businesses often need to do so to get off the ground. High-risk companies such as adult entertainment providers and CBD sellers frequently find it difficult to secure business loans, forcing owners to self-finance. These same businesses often have a hard time finding affordable merchant accounts. As an experienced provider of high-risk merchant account services, Zenti can help you with payment processing if you’re engaged in or thinking about starting a business that’s considered high-risk.

We partnered with Zenti in 2017 and they've been there for us every time. Everything is super fast and I love how well they communicate with our staff. They really know their stuff, and we work in a very complex industry! My account executive knows our business inside and out.
Alexandria, CMO

15 Percent of Americans Have Long-Term Credit Card Debt

One of the most surprising credit card debt statistics is the fact that 15 percent of Americans have been in credit card debt for 15 years or more. While many people pay off their credit cards in full, millions of Americans struggle with the burden of debt for decades at a time.

Unsurprisingly, many believe it will take multiple years to pay off their credit cards. About 24 percent of consumers think they can pay off their debts within two years. Eight percent, however, say it will take five years or longer, including three percent who doubt they’ll ever escape credit card debt.

Common questions about credit card debt:

What percentage of the population has credit card debt? Credit card debt is widespread, and 95 percent of Americans have at least one credit card. Slightly more than 50 percent have 1,000 USD or more in credit card debt.
How much does the average person have in credit card debt? On average, American consumers owe 5,221 USD on their credit cards. The household average is slightly higher at 6,270 USD.

Consumers Use About 25 Percent of Their Available Credit Lines

Credit utilization is one factor that goes into determining your credit score. A common rule of thumb is to keep utilization below 30 percent to maintain a good score. On average, Americans are within this guideline, but the margin of safety is slim. The average consumer’s credit utilization was 25.6 percent in 2021, up slightly from 2020.

This proximity to the maximum advisable credit utilization rate is one of the more troubling credit card debt statistics, as it may mean that many consumers are close to dealing with lower credit scores. This is where credit repair companies can often be extremely helpful, assisting consumers with addressing old credit mistakes and cleaning up their credit profiles. Unfortunately, these types of companies are often categorized as high-risk businesses because they work with less creditworthy clients. Zenti’s Credit Repair Merchant Account allows these essential businesses to accept payments without excessive processing fees, enabling them to continue helping consumers who need to repair their credit.

Nearly Half of Americans Depend on Credit Cards

Approximately 49 percent depend on credit cards to cover basic living expenses. These include groceries, rent and utilities. Although the number skews higher among younger consumers, more than a quarter of Baby Boomers still rely on credit cards for their basic expenses.

People who rely on credit cards for day-to-day expenses often can’t manage financial hardships such as car repairs or medical expenses. About half of Americans say they would use a credit card to cover an emergency expense of 2,000 USD. Many people, particularly younger age groups, don’t have emergency savings. When significant expenses crop up, credit cards are often the most convenient lines of credit to pay for them.

Interestingly, widespread dependence on credit cards doesn’t appear to result in lower average credit scores. In 2021, the average FICO score reached a record high of 714. This suggests that the millions of consumers who use credit cards to pay for basic expenses are managing their credit lines better than they were a few years ago.

Here are some other questions to ponder:

What percentage of Americans are debt free? Only 23 percent of Americans were completely free of debt as of 2020. This isn’t purely a credit card debt statistic, though, as it reports people who are free of all forms of debt.
How much debt is too much? The amount of debt that is considered too much depends on your income. A rule of thumb used by mortgage companies is that debts shouldn’t exceed 36 percent of your income.

The Average Credit Card Interest Rate Is 16.4 Percent and Rising

Credit cards are known for carrying higher interest rates than many other forms of consumer credit. Today, the average rate stands at 16.4 percent. This number has been climbing steadily over the past few years. In 2017, the average rate was merely 13.8 percent. The rise in APRs likely isn’t over yet, as Federal Reserve rate hikes will gradually trickle down into credit cards and other consumer credit instruments. By the end of the year, rates are expected to reach about 19 percent.

As rates rise, it becomes more important for businesses and consumers alike to manage their credit wisely. Most credit cards charge variable interest rates, meaning you’ll pay higher rates on your balance even if the money was spent when rates were lower. Paying down your credit card balance before rates rise further is an excellent way to save money and ensure you don’t get caught up in a cycle of higher interest rates making it more challenging to pay off your card.

Like many with debt, you may wonder about paying it off:

How can you pay off credit card debt? Paying off excessive credit card debt works wonders to make room in your budget and improve your credit score. To pay off debt quickly, you should make more than the required minimum payments and pay your highest interest debt first. Also, explore loan consolidation options that could help lower your monthly payments.

The Majority of Americans Have Missed at Least One Credit Card Payment

Missing a credit card payment is one of the worst things you can do for your credit score. However, 57 percent report missing at least one payment on their credit cards. Surprisingly, the most common reason for missing a payment is simply forgetting it. The second most common reason is the need for extra money to pay for rent, groceries, and other essentials.

Automatic payments are a good way to avoid being part of this negative credit card debt statistic. Setting a specific day of the month to make your payment can also help. Avoiding missed payments is arguably the easiest way to improve your credit score.

Other frequently asked questions about credit reports and credit scores:

What is the average credit score in America? The most recently reported average credit score was 714, a record high.
What happens if you ignore credit card debt? Ignoring credit card debt is a major mistake that can lower your credit score and put you in financial jeopardy. At first, interest and penalties will add up, increasing your debt while your credit score drops due to missed payments. Eventually, your debt will be turned over to a collections agency, or the credit card company can take legal action to garnish your wages or bank account.
Does credit card debt disappear after seven years? Like other forms of reporting, credit card debt will be removed from your credit report after seven years. However, this doesn’t mean that the debt has been forgiven. You’ll still owe the money, even after it no longer appears on your credit history.

Affordable Merchant Accounts for High-Risk Businesses

From small business owners to everyday consumers, credit card payments represent a massive part of modern payment processing. These credit card debt statistics will give you an idea of just how integral credit cards are to the financial system and the day-to-day lives of American consumers.

If you’re looking for an affordable merchant account for your business, get in touch with Zenti today. Our high-risk merchant accounts allow people in practically any business line to process payments without paying excessive fees.

Get started today.

Instant everything.
Next-generation tech.
Easy integrations.

Wanna chat with a human?
Give us a call!
800-520-4488

Super-friendly, US-based support from our HQ in Michigan.