The U.S. national average for credit card debt has reached a staggering $6,555, according to a recent report from Scholaroo. New Jersey residents top the list with an average debt of $8,155 per credit card, followed closely by Connecticut at $8,011. Maryland, New York, and Alaska also have average credit card debts exceeding $7,600 per card. Colorado, California, Massachusetts, Florida, and Hawaii round out the top 10 states with average credit card debts above $7,400. On the other end of the spectrum, Mississippi has the lowest average credit card debt at just $5,186, which is 20% below the national average.
Bruce McClary, senior vice president of membership and media relations for the National Foundation for Credit Counseling (NFCC), explains that the high levels of debt are not surprising given the rising cost of living. Many people are forced to rely on credit cards to cover their expenses. McClary highlights the impact of inflation on grocery prices and fluctuating gasoline prices as major contributors to people’s financial struggles. As a result, individuals often find themselves only able to make minimum payments on their credit card debts each month.
The NFCC’s recently released Harris poll reveals even more concerning results. It shows that almost 32% of Americans are just getting by financially, and 62% fear that government instability will negatively impact their finances in the coming year. McClary emphasizes that carrying large amounts of debt and making only minimum payments can make it incredibly difficult for individuals to save any money. Furthermore, the poll indicates that 31% of Americans do not pay all their bills on time, and only 42% have a budget and keep track of their spending. Nearly 40% of respondents express concerns about the longevity of their savings.
Certain demographic groups are more heavily affected by credit card debt. Single individuals, renters, parents of children under 18, and those with incomes of $50,000 or less are particularly vulnerable. McClary suggests that skyrocketing rents may be a significant factor in this credit card debt situation. People are often spending more than the recommended percentage of their income on rent, leaving them with little room to cover other essential expenses.
The escalating cost of housing has already priced many individuals out of the market. Cities like Seattle, which were once considered affordable, have experienced a significant increase in rents. Consequently, more and more people can no longer afford to buy or even rent in these areas.
To address credit card debt, the Federal Trade Commission (FTC) advises individuals to first communicate with their credit card companies and request assistance. The FTC recommends working out a modified payment plan that reduces monthly payments to a manageable level. Creditors may be willing to negotiate, even if the debt has been written off as a loss. The NFCC also offers renegotiation services with credit card companies to lower interest rates, which can often be as high as 20%.
Ultimately, the Scholaroo report reveals that Americans’ love for credit cards shows no sign of diminishing. Last year alone, 45.5% of the U.S. population opened at least one new credit card account, resulting in a total of 542.6 million new accounts by the end of 2023. While debit cards remain the preferred choice for over 50% of Americans, credit cards are still widely used for daily transactions by 36% of the population.
In light of these findings, it is crucial for individuals to seek financial assistance and adopt responsible budgeting practices to manage their credit card debt effectively. By doing so, they can regain control of their finances and avoid long-term financial difficulties.
