Is Your Credit Card Debt Higher or Lower Than the Average American's?

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Credit cards are a very expensive way to borrow, and yet a lot of Americans rely on them to help them cover costs. The average credit card interest rate as of May 2024 was 21.51%, so whether you're using your cards to cover everyday expenses or make big purchases, you're paying for the privilege if you carry a balance.

If you're in debt, you may be wondering whether that's normal and how your own balance stacks up to your fellow Americans. Let's take a look at how your credit card debt compares to get a better idea of where you stand.

Here's how much credit card debt the average American has

According to research from The Motley Fool Ascent, the average credit card debt balance as of the third quarter of 2023 was $6,501, up from $5,910 in 2022. The average store credit card balance came in much lower than other card types at $1,188.

Store credit cards are not as popular, likely because their rewards programs aren't as generous, you can use them at fewer places, and their interest rates tend to be higher. Still, even without much enthusiasm for store cards, Americans collectively owe a lot of money on all types of cards. In fact, the total outstanding balance stands at $1.142 trillion as of the second quarter of 2024.

Credit cards can be a very costly way to borrow money. While you can earn rewards, credit card companies end up encouraging people to stay in debt for a very long time by charging low minimum monthly payments. The payments coming out of your bank account likely barely cover the interest, which means you could be in debt for decades if you're chipping away at the average balance one minimum payment at a time.

What should you do if you're in credit card debt

If you currently owe money on credit cards, regardless of whether you owe more or less than the average American, you should make getting rid of it one of your top financial priorities.

Now, you don't want to give up investing and earning your 401(k) match, because that's free money. And if you have any debt with an even higher interest rate than your cards, like payday loans, you'll want to deal with that first.

You should likely also save up a starter emergency fund before focusing on debt payoff . Consider putting aside around $500 to $1,000 to cover surprise costs so you don't have to go deeper into debt once you've started digging out.

Once you've covered those basics, though, try to free up as much money as you can pay toward your credit card balances. If you make extra payments, you can take care of your balance decades before you would have if you stuck to just making minimum payments.

If you get aggressive about paying down debt, you can soon bring your balance far below what the typical American owes -- and you can make yourself more financially secure in the process.

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