Who Holds America's Credit Card Debt: Breaking It Down By Age And Income

According to Federal Reserve data, America's outstanding revolving debt — mostly credit card debt — stood at $1.055 trillion at the end of 2018. Who holds most of that debt?

ValuePenguin's report on average credit card debt in America shows that households with the lowest net worth (zero or negative) have the highest average debt ($10,307). However, with respect to age and income levels, ValuePenguin data suggests that you're more likely to hold the most debt if you are from 45 to 54 years old and have an income greater than $160,000.

Isn't that contradictory? It seems that way at first glance, but there's a difference between net worth and income. Households with higher incomes carry higher balances because they're more likely to be able to pay them off whenever they choose. Households with no net worth are more likely to carry high balances because they have to.

Various sources estimate average household credit card debt to be in the $5,000-$7,000 range. Given today's record high average credit card interest rate over 17.6%, large balances like these rack up significant interest charges. It's easy for excessive debt to spiral past your income through ever-increasing interest charges, neutralizing your net worth.

Average credit card debt increases steadily with income levels, but credit card debt equals a higher percentage of income for lower-income households — increasing the chances of runaway debt.

Households making less than $25,000 have an average of $3,000 in credit card debt or 12% of income at the upper end of the scale. The average debt is $3,900 in the $25,000-$44,999 range, or 8.7% of income at the upper end.

The same trend continues with higher incomes, up to the $115,000-$159,999 group with an average credit card balance of $8,300 (5% of income). Households with incomes above $160,000 have the highest average credit card debt at $11,200, but even within the lower end of that income group, the average balance is a manageable 7% of income.

Age is a different story. Credit card debt is the lowest on both ends of the age spectrum, with a sharp increase as we approach our forties.

Americans over 75 years of age have the lowest average credit card debt at $5,638 — although the fixed incomes of retirees can lead to disproportionately high credit card debt.

Americans below the age of 35 come in second, with only $5,808 in average credit card debt. However, they are about to hit their spending primes. The average credit card debt jumps to $8,235 for those 35-44 years old, peaks at $9,096 between the ages of 45 and 54 and falls off slightly to $8,158 from age 55 to 64.

As retirement kicks in, average credit card balances drop to $6,876 for those 65-69 years old and to $6,465 for those 70-74 years old, finally reaching the $5,638 average of the most senior group.

How does your credit card debt stack up with others in your income and age group? In this case, being above average is bad. He who has the most debt does not win.

To stay below average and win at this game, make a realistic budget and adjust spending as needed to keep your credit balances to a minimum. To really come out on top, avoid interest charges entirely by never charging more than you can afford to pay off at the end of each month.

Let credit card issuers make their money off of other households. Hang onto your money, regardless of your age and income.

Credit cards can be an effective way to manage money, improve credit, earn points, and travel with perks if used the right way. Benzinga's personal finance staff provides tips on using credit cards effectively.

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