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Credit Card Debt At Record $870 Billion: Latest Data Shows America's Love Affair with Credit Cards

05-12-2019
Photo ©iStockphoto.com/PhotoBylove
Photo ©iStockphoto.com/PhotoBylove

What's your credit card balance right now? If it's zero, congratulations! You aren't contributing to America's record $870 billion in outstanding credit card balances.

According to Q4 2018 data from the Federal Reserve, we have just over $1.05 trillion in total revolving debt, with $870 billion of that as credit card debt. We've topped the previous credit card peak set in late 2008, thanks in part to a proliferation of new cards. Almost 480 million credit cards are in circulation as of the end of 2018 – over 100 million more than when total credit card accounts bottomed out in 2010.

Credit card balances increased by $26 billion in the fourth quarter of 2018, the highest quarterly increase of all the household debt categories including mortgages, student loans, and auto loans. Total credit card debt remains below the other three categories, but the increase merits attention – because we aren't handling our credit card debts as well as we could.

Approximately 37 million credit card accounts have registered a delinquency of at least ninety days – an increase of two million from Q4 2017. The percentage of credit card accounts transitioning into at least a ninety-day delinquency has been steadily rising since the middle of 2016 and is approaching 5% – nowhere near the double-digit delinquency rates during the depths of the recession in 2009, but still a cause for concern.

Are you having trouble managing your credit card debt? Maybe the problem is aggravated by where you live.

A separate study from USA Today used 2017 data to get regional snapshots of credit card debt and found an unsurprising pattern. States where residents have higher average credit card debt tend to have a higher cost of living, residents with higher incomes, and a higher average number of credit cards per person. Sometimes we charge more because we have to, and sometimes we charge more because we can.

The top five states for average credit card debt (Alaska, Connecticut, Virginia, New Jersey, and Maryland) were the only five states to have average credit card debt over $7,000 (topped by Alaska's $8,515).Costs of living ranged from 2.3% to 13.2% above average, while the average number of credit cards per resident varied from 2.9 to 3.5.

Conversely, the bottom five states for average credit card debt (West Virginia, North Dakota, Mississippi, Wisconsin, and Iowa) were the only five states with average balances below $5,550. The cost of living ranged from 7.2% below average to 13.6% below average, and the average number of cards per resident varied from 2.6 to 2.9.

Credit scores didn't correlate as well with average credit card debt, and that's no surprise. Your credit card balance affects your credit score concerning overall debt, but your credit score is affected more by whether you make your payments on time. You can check your credit score and read your credit report for free within minutes by joining MoneyTips.

The USA Today data shows that credit card challenges vary across the nation, depending on area-specific economic factors. However, the path to overcoming those challenges is the same regardless of where you live. You need a realistic budget and the willpower to keep your charges within that budget. It's okay to periodically overcharge, as long as you can pay down the debt in other months – but avoid continual increases in your balance.

Try not to charge any more than you can pay at the end of each month. The credit card companies will be fine without your contributions. America has almost 480 million other credit card accounts to pick up the slack.

If you want to reduce your interest payments and lower your debt, join MoneyTips and use our free Debt Optimizer tool.

This article was provided by our partners at moneytips.com.

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