The Average American Has This Much Credit Card Debt. How Does Yours Compare?

Image source: Getty Images

It's a pretty common thing for people to have debt, whether it's loans incurred in the course of getting a degree or a mortgage to finance a house. But there's a big difference between installment loans with a fixed interest rate and monthly payments vs. credit card debt.

The problem with credit card debt is twofold. First, credit cards are notorious for charging large amounts of interest. Secondly, credit card interest rates aren't set in stone the same way personal loan interest rates are, so the amount you owe your issuers each month could change for the worse over time.

Featured offer: save money while you pay off debt with one of these top-rated balance transfer credit cards

It's for this reason that it's best to keep credit card balances to a minimum. But unfortunately, the typical balance owed by Americans today is pretty high.

Is your credit card balance higher or lower than the typical American's?

As of 2023, the average U.S. credit card balance was $6,501, according to Experian, one of the three credit reporting bureaus. That $6,501 balance, though, is 10% higher than the average reported in 2022, which means the typical consumer added to their credit card debt last year.

Now it's easy to see why. Living costs have skyrocketed since 2021. And these days, many people have no choice but to rely on credit cards to buy groceries or cover emergency expenses like home and car repairs.

But the fact that the typical consumer owes $6,501 is concerning. And if your debt is at a similar level, you should know that the longer you get it linger, the more money you stand to lose to interest.

Say you owe $6,501 on a credit card with a 20% APR. If it takes you two years to whittle that balance down to $0, you'll have lost $1,440 in interest. If it takes three years, you're looking at $2,197 in interest charges.

That's a lot of money to part with. So whether your credit card balance is more than the typical American's, less, or comparable, it pays to do what you can to eliminate it as quickly as possible.

A good way to tackle credit card debt

You may be inclined to cut your spending and take on a second job to free up money to pay off your credit cards. But you should know that consolidating your debt strategically could make it easier to pay off.

You may want to consider a personal loan . This allows you to lock in a fixed interest rate on your debt and pay it off in equal installments over time. Chances are, you'll be looking at a much lower interest rate on a personal loan than what your credit cards are charging you if your credit score is in good shape.

If you own a home, another option for consolidating your debt is to take out a home equity loan. Because property values are up right now, a lot of property owners have more equity they can tap. This option may end up being even less expensive than a personal loan for you, so it pays to explore it if you've been a homeowner for more than a couple of years (if you're a very recent homeowner, you may not have enough equity to tap just yet).

Finally, you can look at doing a balance transfer to a 0% introductory rate credit card. This gives you a break from racking up interest for a period of time.

But be careful, because those 0% introductory rates don't last forever. And yours might run out after as little as 12 months, depending on the offer you get. From there, the interest rate on your remaining balance can skyrocket.

It makes sense that U.S. credit card debt levels rose in 2023 -- but it's also not such a great thing. No matter how much money you owe on your credit cards , the sooner you get them paid off, the more money you can save by not losing it to interest.

We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy .