Americans owe nearly $1 trillion in credit card debt—here’s the breakdown by age

Americans now hold a record amount of credit card debt — nearly $988 billion, according to the Federal Reserve Bank’s latest data.

“As inflation rose to near 40-year high levels, many consumers have used credit to help manage their budgets, leading to record- or near-record high balances,” Michele Raneri, vice president of U.S. research and consulting at TransUnion, said in TransUnion’s “Q1 2023 Credit Industry Insights Report.”

On average, Americans carry around $5,733 in credit card debt, according to TransUnion’s latest report. But when you break it down by age, most carry more than that.

Those between the ages of 40 and 49 hold an average of about $7,600 in credit card debt — the highest of any age bracket, per TransUnion data provided to CNBC Make It.

“Gen Xers can be especially squeezed by credit card debt because they’re living expensive years right now,” Ted Rossman, senior industry analyst at Bankrate.com, told CNBC in January. “They might be sandwiched between caring for elderly parents and raising their own kids — maybe even putting them through college.”

On the other hand, the youngest credit card users between the ages of 18 and 29 have around $2,900 of debt, per TransUnion’s data. This is understandable since most people in that age group are just beginning to use credit cards.

Here’s the average amount of credit card debt Americans hold at every age, according to TransUnion.

“More people are carrying more debt, and those balances cost more than ever,” Rossman tells CNBC Make It.

Not paying off your credit card bill in full each month has become more costly. Interest rates are currently hovering a little above 20%, according to Bankrate’s May 31 analysis. This time last year, credit card interest rates were around 16% on average.

That’s due to the Federal Reserve’s numerous interest rate hikes since March 2022. Since raising rates makes borrowing money more expensive for consumers, the Fed continued to increase them in an effort to slow inflation.

Although credit card debt is often caused by practical things such as emergencies or day-to-day living costs, it can be hard to stop racking up more debt once the cycle starts, Rossman says.

If your credit card debt is beginning to feel unmanageable, here are two payoff strategies to try.

0% balance transfer credit card

Signing up for 0% balance transfer card is Rossman’s top tip for tackling credit card debt. (Check out this list of the best balance transfer cards from CNBC Select.)

If your card has a high annual percentage rate, these types of cards will allow you to move that debt over to a new card with a 0% APR introductory period that can last as long as 21 months. This will allow you to chip away at your debt without incurring interest charges every month.

Rossman recommends dividing the total amount you owe by the number of months in the interest-free period to come up with a level payment plan you’ll be able to stick to.

It’s important to note that not everyone will qualify for a balance transfer, and sometimes you may not be approved to transfer your total credit card balance. Typically, you need a good to excellent credit score in order to be approved and the likelihood of gaining that approval tends to decrease if your score is below 670, according to Experian.

Be sure to keep an eye on any payment deadlines in order to avoid late charges. Additionally, review the balance transfer fee, which can range between 3% to 5% of the amount you’ve moved onto the new card.

Consolidate your credit card debt

If you have multiple balances on different credit cards, a personal loan can be a useful form of consolidation, Rossman says.

This strategy involves applying for a personal loan large enough to cover your total debt. If you’re approved, you can pay off your credit cards right away, and then repay the loan at a more favorable rate. The average interest rate for personal loans is a little over 11% as of May 31, per Bankrate.

If you have a strong credit score, you may be able to get a personal loan with an interest rate as low as around 7% and pay it back over five to seven years, Rossman says.

It’s important to note that your credit score may be impacted if you miss a payment and once you’ve used up all of the funds from your personal loan, you’ll need to apply for another one to receive more money.

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