American shoppers walking outside shopping area
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Credit cards make purchasing so simple that you might forget they need to be paid off every month. If you don’t pay in full, you’ll end up carrying a balance and start racking up interest charges, meaning anything you buy on credit could end up costing more than the price you originally paid. And you wouldn’t be alone: in the United States, the average household has over $16,000 in credit card debt.

Credit card debt overview

Every time you make a purchase with your credit card, you incur a debt. At the end of the billing cycle, if you haven’t paid the full amount on time, that debt will start to accrue interest.

According to data from the U.S. Census Bureau and the Federal Reserve, American households owe on average a staggering $16,425 in credit card debt, and that amount has risen 10 percent since 2013. Collectively, we owe nearly $1 trillion in credit card debt, on which we pay an average interest rate of 18.76 percent, or about $1,292 per household each year.

In May 2017, it was found that credit card debt had risen 6 percent from the previous year and reached an average high that hadn’t been seen since the Great Recession. Nevertheless, more than 60 percent of American households pay off their credit cards every month or don’t have one at all.

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The demographics of credit card debt

Average credit card debt varies between demographics. For example, men hold on average thousands of dollars more in credit card debt than woman.

Across age groups, the amount of debt steadily rises as people get older until it reaches a peak for individuals between the ages of 35 and 54, but it starts to decline after that. And although many people continue to carry debt well into their 70s, people over age 75 have the lowest total average debt of any age group, comparably only to young people.

This trend is influenced by the tendency to take on more debt as families grow and spending needs increase, but it also tracks closely with studies that show that younger generations are earning significantly less income than their parents did at the same point in life. Generation Xers are particularly weighed down by credit card debt, having lost the highest percentage of their wealth in the wake of the 2007-08 financial crisis.

There is also a positive relationship between income level and credit card debt, with those in the highest income percentiles owing thousands of dollars more than those in the lowest. That’s consistent with racial demographics as well, as black and Hispanic-origin households not only earn less income than white and Asian households but also carry several thousands of dollars less in credit card debt.

More spending means more debt

As people depend more and more on credit cards for everyday purchases, the overall average credit card debt is rising. Credit allows people finance their dreams, and more and more people are using credit cards to fund their lifestyle. This has resulted in a steady increase of average credit card debt in the U.S., with a rate of growth that often exceeds the average increase in household income across the nation.

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