What is the average debt of people who have credit cards?

average credit card debtAccording to a January 17 report from CNN Money, the average credit card balance in the United States at the end of 2011 was just over $6,500. While that may sound like a lot, and it is, it represents a drop of 11% over 2010 according to CNN. That’s good news for a nation still struggling to pull itself out of recession.

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Despite the fact that Americans are reducing their credit card debt, the other side of the story is that the $6,500 number reported by CNN Money is a per-card balance rather than a total balance per household. If you consider the fact that most credit cardholders have two or three cards simultaneously, the total amount of indebtedness could easily exceed $20,000 in some cases. That’s far too much money to owe on unsecured credit cards, which can charge as much as 20% interest.

How many people in the United States have credit cards?

The U.S. Census Bureau reports that 156 million Americans owned at least one credit card in 2009. Furthermore, Americans were using 1.2 billion credit cards for that same year. It’s important to note the total number of 1.2 billion includes major credit cards like Visa, MasterCard, and Discover as well as credit cards for individual companies like department stores and gas stations.

The U.S. Census Bureau further predicts that 160 million Americans will use a total of 1.16 billion credit cards in 2012.

debt for people with credit cardsWhat’s most surprising about these numbers is that the U.S. population is only approximately 313 million people. That means one out of every three is using some sort of credit card regularly.

People are using their credit cards to purchase big-ticket items, take vacations, by clothing, pay medical bills, and so forth. It has easily become more common in the modern day to pay with credit cards that with cash. Their convenience and ease of use makes them much more attractive than older methods of payment.

Should I be concerned if I have excessive credit card debt?

Financial experts suggest that credit card debt be kept at a minimum whenever possible. In a perfect world, it is a good idea only to use a credit card only when you know you’ll have the money in the bank at the end of the month to pay off your balance. That way, you don’t run up interest charges, which could potentially continue adding to your debt. However, this is not a perfect world.

The U.S. Census Bureau claims roughly 55% of all credit cardholders in the United States make a concerted effort to pay off credit card debt in full every month.

If you’re unable to pay off your balances every month, look for tips to manage your credit card debt so that it does not exceed one month’s worth of income. Similarly, financial planners suggest you’re also saving cash every month so that you always have a savings account balance equal to that same amount.

By employing both strategies, you protect yourself in a way that allows you to always be liquid if it becomes necessary. If you allow your credit card balances to exceed one month’s income, you’re automatically putting yourself at risk.

Is the United States in danger of a credit card crash?

In light of the housing crash of 2008 there are many who fear a similar crash could occur within the credit card industry. While that certainly is a possibility, economic experts believe there are issues that are more serious on the horizon. They point to the fact that consumers are reducing their credit card debt as one of the main reasons why they are more worried about other things.

According to recent stories from Consumer Reports and various financial news outlets, a more serious threat hanging over the American economy is that of student loans. Consumer Reports suggests that outstanding debt for student loans now exceeds $1 trillion in the United States. Total credit card debt as of the close of last year was just under $800 billion.

Regardless of where you stand with student loans, you should do everything you can to try and reduce the amount of  your credit card debt. It’s good for your credit score, your wallet, and your overall financial health. You’ll find it’s good for your peace of mind as well.

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