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Average Credit Card Debt: Where Do You Fall?

Compare your credit card debt to the rest of America and learn what you can do to reduce it.

by Navy Federal on August 24, 2017 | Tag(s): Credit Cards

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Credit cards are powerful tools that, when used responsibly, can help you pay for expenses, build credit over time and earn valuable rewards. But sometimes these tools can lead to a mountain of debt that’s daunting to overcome. If you owe credit card debt, know that you’re not alone and that it’s not impossible to pay back. Let’s discuss how your average credit card debt compares to others and the strategies you can employ to overcome it.

Credit Card Debt in America

According to the Federal Reserve, as of May 2017, there was over $1 trillion of outstanding revolving credit debt held by consumers in the United States–which, as stated by the World Bank, is more than the entire gross domestic product (GDP) of countries such as Indonesia or Switzerland! Most of this outstanding revolving credit comprises credit card debt, which was estimated to be $764 billion in the first quarter of 2017, according to NerdWallet. Breaking it down by U.S. households that have credit card debt, it comes to an average credit card debt of $16,425 each, or almost 30 percent of the 2015 median household income of $56,516, as determined by the United States Census Bureau.

That’s a lot to pay back at once. And, while some people (known as transactors) do completely pay off their credit card debt each month, many others (known as revolvers) don’t and accrue interest charges each month. Being a revolver can be a slippery slope because accrued interest charges cause your debt to grow, even if you stop making charges to your card. Also, it doesn’t help that credit cards are one of the most expensive ways to borrow money in terms of interest rates.

How You Can Reduce Credit Card Debt

You can help reduce and prevent credit card debt with the following strategies:

  • Request a lower rate. There’s no harm in calling your credit card company and asking if they'll lower the interest rate on your card. Cite how long you’ve been a loyal customer and any competitors that offer lower rates on similar cards.
  • Increase your income. Whether this means taking on some overtime, getting a second job or asking for a raise, there are a number of ways you may be able to increase your income. You may even be able to make money from a hobby if you can sell something you make or use a specialized skill to teach lessons.
  • Cut back on spending. You may be able to reduce spending in many ways. For example, you could pack homemade lunches instead of going out to eat; bike, bus or carpool instead of always driving your car; move somewhere with lower rent; or shop for some items used instead of new.
  • Consolidate your debt. You can perform a balance transfer to move your balance on one or more credit cards to another, lower-interest credit card. This is a great way to take advantage of a lower interest rate. Additionally, balance transfers can make it simpler to repay your debt by reducing the number of card payments you need to track.

We Can Help

If you’re looking to reduce credit card debt, Navy Federal Credit Union is here to help. In addition to our cards with features such as balance transfers with zero fees,* we offer resources to help you learn more about reducing credit card debt.

*Currently, rates range from 6.99% APR to 18% APR, are based on creditworthiness and product type, and will vary with the market based on the U.S. Prime Rate. ATM cash advance fees: None if performed at a Navy Federal branch or ATM. Otherwise, $0.50 per domestic transaction or $1.00 per overseas transaction. $49 annual fee for Visa Signature® Flagship Rewards.

This article is intended to provide general information and shouldn't be considered legal, tax or financial advice. It's always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.