Average American Credit Card Debt

The average American household which has credit card debt owes $14,750 to credit card companies. Obviously not all American households owe money to credit card companies, but the majority of households do, nevertheless that is a shocking statistic. Before researching I expected the average American household to a few thousand dollars in debt, 3-4 thousand dollars at the very most. 10 thousand dollars would have blown me away, $14,750 is tough to believe but unfortunately it is an accurate statistic. A little less than half of all American households do not have credit card debt whatsoever [good for them!] which means the average household has around $8,500 in debt.

Let’s examine what $15,000 in average American credit card debt [we will round up a little to make calculations easier] really means. The median family household income in the United States is $50,000 after taxes. This means that a family would have to devote every single dollar they make for almost 4 months before they paid off their credit card balance. This is obviously not feasible, families have to pay their mortgage/rent, car loans, food, other expenses and bills… The average American family only has a few thousand dollars in disposable income after all their bills are paid and needs are met, so even if the average family devoted every dollar they could to their credit card debt balance after bills are paid it would still take them several years before they could become median credit card debt free.

It is clear that over half of all American families are in rough financial shape. The recent recession which eliminated jobs and wealth through real estate and the stock market did not do anything to help matters, average American credit card dept yet grows. The only way America will be able to “turn the ship around” as far as personal finance goes is by living more responsibly financially. No one forced you to rack up $10,000 in credit card debt. I know it is easy to do and you feel pressured to “keep up with the jones’s” but you can live a debt free life. It is tough to have sympathy for people in debt when they are the same people who have bought 10 million Ipad’s, 5 million Xbox Kinects, 20 million Iphone’s… It is much easier to spend less money than it is to make more, but if you can do both you certainly should!

If you have to swallow your pride and pick up a part time job making minimum wage for a year or two to eliminate your credit card debt than that is what you will have to do. Credit card debt weighs so heavily on someone financially. Not only does interest rack up very quickly each and every month, your credit score will also take a hit which is huge. It is tough enough to qualify for a mortgage or auto loan these days with decent credit, imagine trying to obtain a loan with poor credit! Simply put, if you are in credit card debt you need to do whatever it takes to get out of it, drastically cut your spending and put every dollar you can find towards paying off your debt.

The easiest way to handle this situation is to avoid it entirely, if you are not yet in credit card debt avoid it completely! This does not mean that you have to give up credit cards, credit cards are great for building up your credit score and giving you cash back and other perks, you simply have to be smart about keeping a balance on your card. Do not buy anything with your credit card that you cannot cover with cash or money from your bank account and do everything in your power to make sure that you do not run a balance on your card from month to month, that is how interest accumulates. Credit cards are not the problem here, the problem is peoples personal spending habits, credit cards can be your best friend or your worst enemy financially, the choice is yours.