If you’ve been worried about your credit card debt becoming overwhelming and hurting your finances, you’re not alone. There are many people in America who have debt, and it’s extremely common to see people struggling with those debts.
As of 2020, revolving debt, which includes credit card debt, sits at around $1,093 trillion and has gone up by appx. 20% since 2016. What’s more shocking is how much Americans have paid in credit card interest. They paid approximately $121 billion in interest in 2019 alone.
In 2019, Americans owed around $830 billion in credit card debt. That number has been steadily increasing since 2008, and it continues to grow today.
Why do Americans owe so much in credit debt?
One of the reasons why people get into debt is because of the consumer culture in the U.S. Since there are credit reports, some people take out credit cards to improve their credit scores and to get better rates on larger investments, like their homes’ mortgages or car loans.
Taking out debt is seen as a way of life, and it’s often necessary. In 2008, the financial crisis resulted in many people using their credit cards to make ends meet. Today, another recession is causing people to fall back on those credit lines again.
In times with a great economy, spending also increases. Why? With solid jobs and incomes, more people spend on credit cards knowing that they can afford to pay them back. Unfortunately, job loss, sudden medical emergencies and other issues can lead to trouble doing so.
Who is the most likely to carry credit card debt in the USA?
Men are likely to carry more debt. Additionally, households with greater incomes are more likely to carry a larger debt, though it is smaller based on the overall percentage of income. For example, someone making $15,100 may have around $2,100 in debt (13.91%) compared to someone who earns $260,000 having $12,500 in debt (on average) and a debt-to-income ratio of 4.8%.
Struggling with debt? There are ways to reduce or eliminate it
Having debt doesn’t mean there aren’t ways to get rid of it. Bankruptcy, consolidation and other methods can help if you have debts that you’re struggling to repay.