Disclosure: Financial Samurai has partnered with CardRatings for our coverage of credit card products. Financial Samurai and CardRatings may receive a commission from card issuers. Opinions, reviews, analyses & recommendations are the author’s alone, and have not been reviewed, endorsed or approved by any of these entities.
How many times have you withdrawn a wad of cash only to see it disappear a few days later with little idea where it all went? By putting as much expenditure on my credit cards as possible I get a handy dandy pie chart and expense line breakdown at the end of every month to see where my money is going. Furthermore, I get all those juicy rewards points that really begin to rack up over time.
Credit card debt is on the rise and the U.S. average household owes a crippling amount. Households in California owe the most with a whopping average of $10,175 in 2019 according to WalletHub with Texas and Florida coming in a close 2nd and 3rd.
According to CreditCards.com the average credit card debt per U.S. adult is $5,673. And the average debt per credit card that doesn’t usually carry a balance is $1,154 (must equal spend). They also report lower findings per state and list Alaska with the highest credit card debt at $7,726 followed by New Jersey at $6,881 and Connecticut at $6,876.
ValuePenguin lists the average credit card debt per household at $5,700 and at $9,333 for average balance-carrying households.
According to TransUnion, the average credit card balance per consumer was $5,554 in 1Q2019. Meanwhile, CNBC reports that only 10% of Americans have a monthly average credit card balance over $5,000.
Depends How You Slice It
So you can see that it’s hard to figure out what’s the right number when it comes to the average credit card debt per household and per consumer. The figures vary a lot by source and by how the data is sliced and diced. One way to finding a better average credit card debt and spend number is to simply get more datapoints with a short four question survey below.
The impact on the amount of average revolving credit card debt per household is largely determined by income. You might have an astounding $15,000 in revolving credit card debt, but if you are making $1 million a year, who cares? The more pertinent measure is average revolving monthly credit card debt to average monthly gross income.
What’s confusing is that it’s unclear whether people who pay off their credit card bills every month are also included in the average credit card debt per household by each source. After all, when I charge something on my card, I have interest free debt for 28-31 days, depending on the month, until I pay the bill off in full.
The solution is to simply calculate the average credit card spend a month to the average monthly gross income, and calculate the average revolving credit card debt a month to the average monthly gross income to get a more thorough picture.
My Average Credit Card Monthly Expenditure
I logged on to my credit card account to see how much I’ve been spending the past four months and here’s what I found:
May – $3,001 (had to buy a new oven)
April – $1,940
March – $1,709
Feb – $1,910
My average monthly credit card expenditure between three cards is therefore $2,140 for the past four months. I’m probably going to spend another $3,000 in June due to a trip to London, but a lot of those expenses are going on my Chase Ink Business Cash corporate card given I’ll be meeting several business partners. $2,140 compares favorably to all the figures above for the average credit card debt per household.
My average revolving credit card debt a month is $0 because I pay it off every month instead of paying for the usurious 17%+ rates.
The Median Household Income
Hence, my ratio for credit card spend to income is less than 21.4% ($2,140 / $10,000). And given my credit card spend accounts for 90% of all my expenditure excluding mortgages, and my primary mortgage debt is less than 25% of my monthly income, my savings rate is over 50%. Pretty straightforward.
My average monthly revolving credit card debt to income is 0 ($0/$10,00 = 0).
Calculate And Compare Your Own Numbers
Tabulating your average monthly credit card spend and average monthly revolving credit card debt and comparing it to the national average is a good exercise. Even for those will large revolving credit card debt, I’m hopeful because you generally can’t have large credit card debt without a large income.
I believe the majority of folks who get into financial trouble have more of a spending problem than an income problem. Credit card spending is much more controllable than making more money as an employee given raises average 2% a year nationally and entrepreneurship is brutally difficult. Credit card expenditure, on the other hand, can swing wildly month to month.
Is there any wonder why the average American is facing a difficult retirement with the average monthly credit card debt surpassing monthly gross wages? It’s impossible to save if you continuously owe more in credit card debt than you pull in a month.
If you can’t make more money, cut spending. If you can’t cut spending, make more money. If you can’t cut spending and can’t make more money, then you are a contributor to the widening wealth gap. If you can cut spending and make more money, you’re on the path to eventual financial freedom.
All is not lost however if you are carrying a balance on high interest rate credit cards. Consolidating your credit card debt onto one new 0% APR credit card through a balance transfer can help you get in control of your debt.
If you’re unsure how to do that, check out this helpful guide on how to do a 0% APR credit card balance transfer and save money.
Additionally, utilizing a high rewards cash back credit card is another way to keep more money in your own pockets and out of the debt collectors hands.
Track Your Net Worth For Free: In order to grow your net worth, it’s important to thoroughly understand the details of your net worth. People are spending more than they think and saving less than they think. False beliefs add up to deleterious consequences over time as people wonder where all their money went. As soon as I started tracking my net worth through an Excel document 12 years ago, I was able to optimize my money for the greatest returns.
In 2012, I signed up for Personal Capital’s free financial dashboard that tracks your net worth for you once you link all our accounts, analyzes your investment portfolio(s) for excessive fees, provides monthly cash flow analysis, and helps you forecast your retirement.
Check Your Experian Credit Score Today: For only $1 you can check what your latest Experian credit score is straight from their website. It’s a good idea to see what your credit score is before applying for a loan. If it’s below 720, you won’t get the best rate, but at least you can spend time to improve your score. Furthermore, 1 out of 4 credit reports have errors, negatively affecting one’s credit score. I had a $7 late electric bill that crushed my credit score by 100 points and almost derailed my mortgage refinance. The scary thing is, I had no idea for years! Check your credit score today.
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- Earn over 60,000 bonus points when you spend $4,000 on purchases in the first 3 months from account opening. That’s a ~$750 value in travel rewards right there.
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- You get 2X points on travel and dining at restaurants & 1 point per dollar spent on all other purchases.
Updated for 2020 and beyond.
Disclosure: Financial Samurai has partnered with CardRatings for our coverage of credit card products. Financial Samurai and CardRatings may receive a commission from card issuers. Opinions, reviews, analyses & recommendations are the author’s alone, and have not been reviewed, endorsed or approved by any of these entities.Responses are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.