The Demographics of Credit Card Debt

By Lindsay Frankel
Inside Subprime: February 17, 2020

83 percent of adults have at least one credit card, but individual uses for credit cards vary. Some people use credit cards as a safety net, while others see them as a means to earn rewards for their spending. Most people carry a balance, with the average person owing $6,194, and only 45 percent pay their monthly balance in full, according to the Federal Reserve. And the situation is dire for some Americans; 11 percent of adults surveyed said they wouldn’t be able to pay their credit card bill that month. 

Some credit card spending is healthy and helps increase an individual’s credit score, which is essential to economic mobility. But for those barely meeting the minimum payments, interest can add up, and debt can get out of hand. Credit card debt is especially overwhelming some groups more than others. 

Credit card debt and age

Experian data from the second quarter of 2019 revealed that credit card balances increase with age, peak at age 51, and then decline thereafter. Americans in their 50s had the highest average credit card balance at $8,364. Americans in their 90s had the lowest average credit card balance at $1,433. Consumers in their 20s saw the steepest increase in credit debt from the previous year. 

Age RangeAverage Credit Card Debt

The highest balances correspond with peak earning years, so the high average balance doesn’t indicate adults in their 50s are struggling the most. The data seems appropriate to the earning and spending habits of different age groups.

Credit card debt and income

People who earn more have higher credit card balances, but the average debt-to-income ratio declines as income increases, indicating that higher earners are more capable of managing their debt. By contrast, low-income Americans are squeezed the most by credit card debt because they have less money to put towards necessary expenses. 

Income Average Credit Card DebtDebt-to-Income Ratio
$24,999 or less$3,00012% or more
$25,000 to $44,999$3,9009-16%
$45,000 to $69,999$4,9007-11%
$70,000 to $114,999$5,8005-8%
$115,000 to $159,999$8,3005-7%
$160,000+$11,2007% or less

There are differences in credit card use across income levels as well. People with high incomes are significantly more likely to have at least one credit card. 97 percent of Americans earning six figures have at least one credit card, compared to only 65 percent of Americans earning less than $40,000 per year. That’s concerning given that healthy credit card use can increase economic mobility. 

The disparities may be in part due to factors that impact a credit card company’s decision to extend credit to an individual. Only 60 percent of low-income Americans are confident that a credit card application would be approved, compared to 95 percent of high-income Americans. Low-income consumers may have more difficulty getting a credit card and using it to build credit. That said, there are products available for subprime borrowers, and Fintech companies are increasingly issuing credit cards to people with poor credit. 

Credit card debt by state

While Americans in every state have credit card debt, the balances in some states are significantly higher. Here are the 10 cities with the highest average credit card balance

StateAverage Credit Card Balance
New Jersey$7,084
District of Columbia$7,077
New York$6,491

Some of the most expensive cities are within these states (New York City, Honolulu, and Washington D.C. are all in the top 10), and many of the states with the highest median income are also included on the list. Since credit card balances generally increase with income, it makes sense that we would see wealthier states on the list. 

How are Americans using credit cards?

Many Americans use credit cards as a safety net, especially if they don’t have an emergency fund. 43 percent said they would cover a $400 emergency expense with a credit card paid over time. Of those emergency expenses, it seems medical expenses take a significant toll. More than 40 percent of adults said medical costs were contributing to their credit card debt. 

Another way Americans are using credit cards is to finance things like higher education and entrepreneurship. In fact, 25 percent of adults borrow with credit cards to assist with paying for their education, indicating that student loans aren’t covering all the costs. 

Credit cards can help with income volatility and unexpected costs, and while they’re not necessarily the best method of borrowing, they’re also not the worst. Interest rates on credit cards are much lower than the rates associated with payday loans, for example. And since credit score impacts so many aspects of life, it’s a good idea to use a credit card to establish and build credit; just make sure to use it responsibly and always have a plan to pay back what you owe. 

For more information on personal finance and payday loans, see our city and state financial guides including states and cities like California, Texas, Illinois and more.