Credit Card Debt Study: Trends & Insights
1:38 AMPosted by: Alina Comoreanu
Credit card debt statistics speak to the financial health of American households. They can also foreshadow over-borrowing bubbles, changes to lending standards, and other trends with the potential to impact our wallets.
We started 2018 owing more than $1 trillion in credit card debt. We ended it $67 billion deeper in the hole after an expensive second half of the year. Things began on an encouraging note, as Americans repaid $40.8 billion in credit card debt during Q1 2018 – the second-largest quarterly payoff ever and an apparent turning point in consumers’ addiction to overspending. But we added almost $108 billion in credit card debt back to our tab over the next three quarters instead, putting household finances on a decidedly more negative track heading into 2019.
So it’s not a question of whether consumers are weakening financially. It’s a matter of how long our overdependence on credit card debt will last and just how bad it will get. Below, you can learn more about the current debt environment, including which cities owe the most and how that changed during 2018, according to the latest data available from TransUnion and the Federal Reserve.
- Main Findings
- Average Credit Card Debt per Household
- Credit Card Debt Increase by City
- Tips for Managing Debt
- Methodology
- Raw Data
Outstanding credit card debt is at the highest point since the end of 2008, after reaching an all-time record high for a fourth quarter in Q4 2018.
Embed on your website<iframe src="//d2e70e9yced57e.cloudfront.net/wallethub/embed/24400/linechart-quarterly-net-change.html" width="865" height="450" frameBorder="0" scrolling="no"></iframe> <div style="width:865px;font-size:12px;color:#888;">Source: <a href="https://ift.tt/2HrvD2I>We ended 2018 with $66.7 billion in new credit card debt, and WalletHub projects a $60 billion increase in 2019.
Embed on your website<iframe src="//d2e70e9yced57e.cloudfront.net/wallethub/embed/24400/linechart-outstanding-debt.html" width="865" height="450" frameBorder="0" scrolling="no"></iframe> <div style="width:865px;font-size:12px;color:#888;">Source: <a href="https://ift.tt/2HrvD2I>The $58.1 billion in credit card debt added during Q4 2018 is 35% higher than the post-Great Recession average for a fourth quarter.
Embed on your website<iframe src="//d2e70e9yced57e.cloudfront.net/wallethub/embed/24400/linechart-net-change.html" width="865" height="450" frameBorder="0" scrolling="no"></iframe> <div style="width:865px;font-size:12px;color:#888;">Source: <a href="https://ift.tt/2HrvD2I>Since the end of the Great Recession, consumer performance has regressed on a year-over-year basis in 6 of every 10 quarters.
At 3.57% for Q4 2018, the charge-off rate is up nearly 2% year over year.
Embed on your website<iframe src="//d2e70e9yced57e.cloudfront.net/wallethub/embed/24400/linechart-charge-off-rate.html" width="865" height="450" frameBorder="0" scrolling="no"></iframe> <div style="width:865px;font-size:12px;color:#888;">Source: <a href="https://ift.tt/2HrvD2I>
Average Credit Card Debt per Household| Stat | 2018 | 2017 | Percent Change |
|---|---|---|---|
| Average Credit Card Debt per Household | $8,788 | $8,557 | 3% |
| Total Credit Card Debt | $1.034T | $1.003T | 3% |
| Annual Net Increase | $66B | $87B | -24% |
The average household’s balance, at $8,788, is $327 over being sustainable.
Embed on your website<iframe src="//d2e70e9yced57e.cloudfront.net/wallethub/embed/24400/linechart-average-debt.html" width="865" height="450" frameBorder="0" scrolling="no"></iframe> <div style="width:865px;font-size:12px;color:#888;">Source: <a href="https://ift.tt/2HrvD2I> Cities with the Most & Least Credit Card DebtNationwide, consumers added $16 billion in credit card debt during Q3 2018, pushing total balances to record levels for this time of year. Clearly, this is a ticking time bomb for the country’s economy overall. It’s also a sign of severe financial distress at the local level, multiplied across cities and towns coast to coast. We’re not equally burdened by this credit card debt crisis. Below, you can see which cities have the most and least work ahead of them.
Cities with the Least Sustainable Credit-Card Debt
- Colleyville, TX
- Darien, CT
- Park City, UT
- Fairbanks, AK
- Summit, NJ
- Leawood, KS
- The Woodlands, TX
- Mill Valley, CA
- Needham, MA
- Sammamish, WA
Cities with the Most Sustainable Credit-Card Debt
- Carmel, IN
- Gainesville, TX
- Lake Forest, IL
- Bastrop, LA
- Allen, TX
- Madison, MS
- Coral Gables, FL
- Frankfort, KY
- Russellville, AR
- Southaven, MS
For the full list, please see our credit card debt payoff report.
Tips For Managing Credit Card Debt-
- Make a Budget & Stick to It: It’s difficult to spend within reason or plan savings if you don’t know how your monthly spending compares to your take-home pay, or where that money is going. That is why you should rank-order your expenses – including debt payments, emergency fund contributions and other savings – and trim the fat, if necessary.Most importantly, once you develop your budget, make sure to stick to it or else you’ll have simply wasted your time.
- Build an Emergency Fund: With a safety net of cash to fall back on, you won’t be as likely to fall behind on your bills in the event of emergency expenses or unplanned joblessness. Your goal should be to gradually save about a year’s worth of after-tax income. In other words, set aside a little bit every month until you’ve got a nice cushion.
- Improve Your Credit: This might sound a bit counterintuitive, seeing as more credit could mean more debt. But improving your credit standing will have a dramatic impact on the cost of your debt. And reducing the cost of your debt will allow you to pay it off faster. Better credit can also make it easier to find a job or a place to live, both of which impact your bottom line.You can check your latest credit score for free and get personalized credit-improvement tips on WalletHub.
- Try the Island Approach: The Island Approach is a strategy that involves using a collection of credit cards, with each serving a specific purpose. For example, you could transfer your existing debt to a 0% balance transfer credit card to save on finance charges and get out of debt sooner. And you could use a rewards card or two – perhaps one with travel rewards and one with cash back, or maybe a store credit card – for purchases that you’ll be able to pay off by the end of the month.This will enable you to get the best possible collection of terms. It will also tell you when you’re overspending. Finance charges on your everyday spending cards will signal a need to cut back.
- Repay Your Most Expensive Debt First: Most people with serious credit card debt have multiple balances. If that’s the case for you, try the “avalanche method.” That means putting the majority of your monthly debt payment toward the balance with the highest interest rate and making the minimum payment required on the rest. Once your most expensive debt is paid off, repeat the process until you’re debt-free.
- Evaluate Your Job Situation: In some cases, all the budgeting and planning in the world won’t be enough to solve your debt problems. You may need to explore whether higher-paying opportunities exist for people with your background or consider acquiring some new skills to make yourself more marketable.This may require a bit of an investment in yourself, but as long as you get a worthwhile return, it’s money well spent.
WalletHub’s quarterly credit card debt studies are based on analysis of the latest data on consumers’ finances available from TransUnion as well as the Federal Reserve. Quarterly changes in credit card debt levels include both the total amount outstanding and charged-off debt that is no longer on credit card companies’ books but consumers continue to owe.
WalletHub has been tracking credit card debt levels on a quarterly basis since 2008.
Raw DataNet Result of Consumer Credit Card Debt Q1 2008 – Q4 2018
| Net Result in Debt Load | Relative to Same Period Last Year | Relative to Same Period Two Years Ago | |
|---|---|---|---|
| 2018 | $66,651,115,684 | -24% | -25% |
| 2018 Q4 | $58,115,362,173 | -7% | -1% |
| 2018 Q3 | $27,661,171,041 | 25% | 24% |
| 2018 Q2 | $21,690,826,538 | -34% | -37% |
| 2018 Q1 | -$40,816,244,067 | 34% | 54% |
| 2017 | $87,318,695,939 | -1% | 100% |
| 2017 Q4 | $62,733,006,200 | 7% | 162% |
| 2017 Q3 | $22,060,687,021 | -1% | 2% |
| 2017 Q2 | $32,970,339,601 | -4% | 2% |
| 2017 Q1 | -$30,445,336,882 | 15% | -11% |
| 2016 | $88,589,817,350 | 103% | 50% |
| 2016 Q4 | $58,478,753,485 | 145% | 26% |
| 2016 Q3 | $22,301,039,836 | 3% | 37% |
| 2016 Q2 | $34,329,380,594 | 6% | 20% |
| 2016 Q1 | -$26,519,356,565 | -23% | -17% |
| 2015 | $43,691,184,730 | -26% | 12% |
| 2015 Q4 | $23,915,838,915 | -48% | -44% |
| 2015 Q3 | $21,692,640,417 | 33% | 84% |
| 2015 Q2 | $32,459,564,141 | 14% | 92% |
| 2015 Q1 | -$34,376,858,743 | 7% | 6% |
| 2014 | $59,077,634,282 | 51% | 67% |
| 2014 Q4 | $46,334,820,193 | 8% | 16% |
| 2014 Q3 | $16,258,183,885 | 38% | 31% |
| 2014 Q2 | $28,552,944,199 | 69% | 64% |
| 2014 Q1 | -$32,068,313,994 | -1% | -7% |
| 2013 | $39,154,438,946 | 11% | -16% |
| 2013 Q4 | $42,824,295,104 | 7% | -2% |
| 2013 Q3 | $11,768,950,933 | -5% | -27% |
| 2013 Q2 | $16,900,498,062 | -3% | -12% |
| 2013 Q1 | -$32,339,305,153 | -6% | -1% |
| 2012 | $35,378,042,438 | -24% | 1407% |
| 2012 Q4 | $39,983,657,892 | -9% | 56% |
| 2012 Q3 | $12,429,815,284 | -23% | 124% |
| 2012 Q2 | $17,452,371,842 | -9% | 81% |
| 2012 Q1 | -$34,487,802,581 | 5% | -10% |
| 2011 | $46,382,251,914 | 1876% | 5501% |
| 2011 Q4 | $43,750,311,211 | 70% | 95% |
| 2011 Q3 | $16,103,668,962 | 190% | 34% |
| 2011 Q2 | $19,232,739,358 | 100% | 103% |
| 2011 Q1 | -$32,704,467,617 | -15% | -27% |
| 2010 | $2,346,831,104 | 373% | -96% |
| 2010 Q4 | $25,676,986,270 | 14% | -29% |
| 2010 Q3 | $5,543,887,035 | -54% | -60% |
| 2010 Q2 | $9,618,368,878 | 1% | -59% |
| 2010 Q1 | -$38,492,411,078 | -14% | 122% |
| 2009 | -$858,808,704 | 102% | 101% |
| 2009 Q4 | $22,431,780,706 | -38% | -65% |
| 2009 Q3 | $12,041,361,702 | -12% | -69% |
| 2009 Q2 | $9,492,875,778 | -60% | -70% |
| 2009 Q1 | -$44,824,826,891 | 159% | 104% |
| 2008 | $56,165,464,197 | -50% | -42% |
| 2008 Q4 | $36,046,098,712 | -44% | -34% |
| 2008 Q3 | $13,751,457,775 | -64% | -46% |
| 2008 Q2 | $23,689,133,013 | -26% | -4% |
| 2008 Q1 | -$17,321,225,304 | -21% | 107% |
Net Result in Debt Load – Green indicates that consumers decreased their debt relative to the previous quarter. Red indicates they increased their debt relative to the previous quarter.
Relative to Same Period – Green indicates that consumers either paid down more debt or accumulated less debt than they did in the previous two years. Red indicates that they either paid down less debt or accumulated more debt than they did in the same quarter in the previous two years.
Consumer Credit Card Debt and Charge-off Data (in Billions) Q1 1986 – Q4 2018:
*Numbers may differ from year to year due to the fact that the Federal Reserve regularly retroactively updating figures. Questions or requests for information can be directed to our media department.
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