Published in: Credit Cards | Feb. 17, 2020

Here's the Average American's Credit Card Debt -- and How Much It Costs Them

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Credit card debt can be very costly, and the average consumer owes thousands of dollars.

The average American consumer now has $6,194 in credit card debt, according to Experian. This is up from $6,040 in 2018. 

As of November 2019, the average credit card APR was 14.87%, according to Federal Reserve data, but this includes accounts without interest, such as 0% APR introductory rates. If you're looking only at accounts that are assessed interest, the average APR is a significantly higher 16.88%. 

So the average American has $6,194 in credit card debt at an average interest rate of 16.88%. A quick multiplication tells us that the average consumer is paying $1,045.55 annually just for the privilege of owing money to their creditors. That's over $1,000 that could be used to save for retirement, added to an emergency fund, or used for virtually any purpose that's more productive to your financial health.

A couple sitting on their couch and reading through their bills.

Image source: Getty Images

Do you have too much credit card debt?

There's no set number that qualifies as "too much" credit card debt. What one person would define as an overwhelming debt burden could be a completely manageable amount to another. That said, most financial planners (myself included) are of the mindset that any amount of debt on which you're paying a double-digit interest rate is too much.

With that in mind, if you have high-interest credit card debt and are tired of your hard-earned cash going straight to your creditors' pockets, here are two ways you could take control of the situation and set yourself on the path to freedom from that debt.

Balance transfers help you avoid interest

Competition in the credit card industry has never been higher, and as a result, there are some excellent offers on the market. Many of these offers are in the form of 0% APR balance transfers.

Here's why this can help: Let's say you open a new credit card that offers a 0% APR on balance transfers for the first 15 months. By transferring your existing credit card debt onto your new card, every dime you pay toward your credit card debt will be applied toward principal, not interest, thereby getting you out of debt faster.

As I mentioned, there are some great options when it comes to balance transfer credit cards. Some have excellent reward programs, no annual fees, and other perks. It's standard practice to charge a small fee (say, 3% of the transferred balance), but there are some no-fee balance transfer offers in the market now. 

Personal loans can help manage larger amounts of debt

Balance transfers can be great if you can pay off the debt before the introductory period expires. However, that isn't always the case.

Personal loans can be excellent debt repayment tools for consumers who want to get their debt situation under control but need a little more time than a balance transfer credit card's 0% APR period provides.

Depending on the lender, personal loans can be obtained in amounts as high as $100,000, and with repayment terms as long as 72 months (or possibly more). Personal loans generally have fixed interest rates, and if you have good credit, you can probably find a lower APR than your credit cards charge. With a personal loan, you can get a fixed monthly payment and a set repayment length for your debt. Plus, because you'll be using the personal loan to pay off your credit cards, a personal loan can be a positive catalyst for your credit score as well.

The bottom line

If you have thousands of dollars in credit card debt, you aren't alone. However, if you're tired of paying hundreds or even thousands in interest to creditors month after month, there are some great options to help you get your debt situation under control once and for all.

Don't pay credit card interest until nearly 2022

The Ascent just released a free credit card guide that could help you pay off credit card debt once and for all. Inside, you'll uncover a simple debt-cutting strategy that could save you $1,863 in interest charges paying off $10,000 of debt. Best yet, you can get started in just three minutes!

Find the right card for you

Balance Transfer