US Credit Card Debt Skyrockets Beyond $6,500 Average

Report Reveals Rising Credit Card Debt

A recent report from Scholaroo, a national firm that connects college students with potential scholarships, reveals that the average credit card debt in the US has risen to $6,555. The study, which surveyed over 2,000 people across the country during the last quarter of 2023, found that New Jersey residents have the highest average credit card debt at $8,155 per card.

States with Highest and Lowest Debt

Following closely behind New Jersey is Connecticut, with an average credit card debt of $8,011. Maryland, New York, and Alaska also have high average debts, exceeding $7,600 per card. The top ten states with the highest average credit card debt, which also includes Colorado, California, Massachusetts, Florida, and Hawaii, all have debts over $7,400. On the other end of the spectrum, Mississippi has the lowest average credit card debt, with residents owing just $5,186, which is 20 percent less than the national average.

Factors Contributing to Rising Debt

Bruce McClary, senior vice president of membership and media relations for the National Foundation for Credit Counseling (NFCC), attributes the rising debt to the increasing cost of living and inflation. Many people are resorting to using their credit cards to manage their expenses and are only able to make minimum payments each month. The NFCC, a nonprofit credit counseling organization, also conducted a survey which revealed that nearly 32 percent of Americans are just managing financially, while 62 percent fear that government instability will negatively impact their finances in the next year.

Debt Repayment and Financial Stability Concerns

McClary expresses concern that if people continue to carry high amounts of debt and only make minimum payments, it could take years to pay off the debt and make saving money extremely difficult. The NFCC's survey also found that 31 percent of Americans do not pay all their bills on time and only 42 percent have a budget and keep track of their spending. Almost 40 percent of those surveyed are worried that their savings will not last.

Most Affected Groups

The NFCC's survey identified the most affected groups as single individuals, renters, parents of children under 18, and those with incomes of $50,000 or less. McClary suggests that high rents may be contributing to the rising credit card debt. With most people paying more than the recommended percentage of their income towards rent, they are struggling to manage other expenses and are relying on credit cards to make ends meet.

Advice for Managing Debt

The Federal Trade Commission’s (FTC’s) Consumer Advice Department recommends that those struggling to make even the minimum monthly credit card payments should first talk with the company to ask for its help. The NFCC also provides renegotiation services with credit card companies to reduce the monthly interest rates, which can sometimes be as high as 20 percent.

Continued Use of Credit Cards

Despite the rising debt, Americans continue to use credit cards. The Scholaroo report found that last year, almost 45.5 percent of the U.S. population opened at least one new credit card account, resulting in some 542.6 million new accounts by the end of 2023. While more than 50 percent of Americans prefer using debit cards for their day-to-day expenses, credit cards are the second most favored choice, with 36 percent of the population using them for their daily transactions.

What's Your Take?

This article presents a sobering look at the state of credit card debt in the US. It raises questions about the sustainability of current spending habits and the potential long-term impacts of high levels of debt. What are your thoughts on this issue? Share this article with your friends and join the conversation. Don't forget to sign up for the Daily Briefing, which is delivered every day at 6pm.