You Won't Believe How Much Credit Card Debt Increased Last Year

Balances soared in 2022, and that means cardholders are in for some expensive interest charges.

Inflation sent prices skyrocketing last year. With practically everything being more expensive, it's no surprise that credit card debt increased. The surprising part is just how much people's card balances went up. Here's the recent data and what you can do if you have credit card debt right now.

The average credit card debt in the United States

The average credit card debt increased by 13.2% last year, from $5,221 in 2021 to $5,910 in 2022, according to an analysis by Experian. Average credit utilization (the portion of their credit that a consumer uses) increased from 26% to 28%.

This is the first time average credit card debt has increased during the pandemic, and it's getting closer to pre-pandemic numbers. Here's a look back at how the average has changed over the past four years.

Most types of debt increased last year, but nowhere near as much as credit card debt. The next-largest increases were:

• Auto loans: 7.7%
• Mortgages: 7.3%
• Personal loans: 7.0%
• HELOCs: 3.8%

Considering the effect inflation had on prices, you might assume that people were relying on their credit cards more for everyday expenses. Interestingly enough, Experian attributed the increase to consumers spending more on goods and services such as vacation travel and dining out. There were certainly plenty of people who used their credit cards to help cover regular bills. But part of the increase was also people getting back to normal spending habits after being unable to travel or dine out much during the pandemic.

What to do if you have credit card debt

It's always better to avoid carrying balances on your credit cards when possible. You won't get charged interest this way, and you'll have more money available to put toward financial goals.

However, right now is an especially challenging time to be in credit card debt. The Federal Reserve has been raising interest rates to fight inflation. Credit cards already had high interest rates, but they've gotten much higher. The average credit card APR is now over 20%. On that average balance of $5,910, a 20% APR would cost you $1,182 per year.

So, what can you do if you're in that situation? Here are a few tips that will help you get out of credit card debt:

• Track your spending and cut back on expenses. A budgeting app can help you see where you're spending money and find places to save. Watch out in particular for big discretionary expenses, such as dining out and online shopping.
• Pay as much as you can every month. Don't just make minimum payments -- it takes years to pay off a credit card this way. Use all your spare cash to pay down your debt.
• Save money on interest with a balance transfer. Balance transfer credit cards offer a 0% intro APR, and intro periods can last 18 months or longer. If you have a good credit score, try applying for one of these cards. If you're approved, you can transfer over your credit card balances and pay them down interest-free during the intro period.

As the numbers demonstrate, credit card debt is a common issue. It doesn't need to be something you live with indefinitely, though. If you prioritize paying it off, and you follow those tips, you'll be well on your way to getting free of credit card debt.