The credit card debt picture for consumers is getting uglier and uglier by the day. A pair of reports released this week paint a picture that is increasingly bleak for consumers, who are falling further and further behind on their credit card payments and paying less and less of their debts off every month. Nearly half (48%) of credit cardholders are carrying a balance month-to-month, according to Bankrate’s November 2024 data. While this figure is slightly lower than mid-2024 levels, it remains significantly higher than pre-pandemic levels (39% in December 2021).
- Interest rates matter: Credit card interest rates, averaging over 20%, exacerbate the debt burden. The combination of high balances and compounding interest creates a slippery slope for consumers struggling to repay.
- Duration of debt: Alarmingly, 53% of cardholders with debt have carried balances for over a year, including 22% of high-income households ($80,000+) who have been in debt for five years or more.
- Carrying the load: Adjusted for inflation, the average household credit card balance was $10,974 at the end of November 2024, according to Wallethub. That’s just $1,736 below the record that was set in 2007, just before the onset of the Great Recession.
Zoom in: Demographic insights reveal disparities in debt accumulation and repayment expectations.
- Income and gender divide: Women (52%) and lower-income cardholders (59% for those earning <$40,000 annually) are more likely to carry debt, often due to day-to-day expenses like groceries and childcare. Interestingly enough, those living in households with incomes of below $40,000 are the least likely of any income level to be carrying credit card debt for at least a year.
- Generational trends: Gen X leads in carrying balances (54%), while Baby Boomers, despite being the most likely to have credit cards, are the least likely to carry debt (45%).
- Optimism vs. reality: While 71% of debtors believe they’ll pay off balances within five years, only 6% acknowledge they may never get out of debt. Nearly half of consumers admit they don’t have a plan for paying off their credit card debt.
By the numbers:
- Credit card balances: Up 51% since early 2021, with delinquencies reaching their highest levels since 2011.
- Net debt changes: Americans added $21 billion in credit card debt during Q3 2024, a 31% decrease from Q3 2023.
