Credit cards have such high interest rates, making a few thousand dollars in debt nearly insurmountable.

Debt totals

• At the end of 2008, Americans’ credit card debt reached $972.73 billion, up 1.12% from 2007. That number includes both general purpose credit cards and private label credit cards that aren’t owned by a bank. (Source: Nilson Report, April 2009)
• Average credit card debt per household — regardless of whether they have a credit card or not — was $8,329 at the end of 2008. (Source: Nilson Report, April 2009)
• The average outstanding credit card debt for households that have a credit card was $10,679 at the end of 2008. One year earlier, that average was $10,637. (Source: Nilson Report, April 2009)
• The average balance per open credit card — including both retail and bank cards — was $1,157 at the end of 2008. That’s up from $1,033 at the end of 2006, a growth of nearly 11 percent in two years. (Source: Experian marketing insight snapshot, March 2009)
• As of March 2009, U.S. revolving consumer debt, made up almost entirely of credit card debt, was about $950 Billion. In the fourth quarter of 2008, 13.9 percent of consumer disposable income went to service this debt. (Source: U.S. Congress’ Joint Economic Committee, “Vicious Cycle: How Unfair Credit Card Company Practices Are Squeezing Consumers and Undermining the Recovery,” May 2009)
• “As household wealth has declined in the downturn, more American families are facing financial distress due to high debt burdens. In 2007, before the recession began, 14.7 percent of U.S. families had debt exceeding 40 percent of their income.” (Source: U.S. Congress’ Joint Economic Committee, “Vicious Cycle: How Unfair Credit Card Company Practices Are Squeezing Consumers and Undermining the Recovery,” May 2009)
• In 2007, the average balance for those carrying a balance rose 30.4 percent, to $7,300. Meanwhile, the median balance — meaning half owe more and half owe less — for those carrying a balance rose 25.0 percent, to $3,000. These increases followed slower changes over the preceding three years, when the median increased 9.1 percent and the average climbed 16.7 percent. (Source: Federal Reserve Survey of Consumer Finances, February 2009)
• In the fourth quarter of 2008, consumers over 60 had an average balance of $763 per open bankcard or retail accounts. A year before, that balance was $746. The year before that, it was $735 — meaning the average has jumped about 4 percent in 2 years. (Source: Experian marketing insight snapshot, March 2009)
• In 2007, credit card balances made up 3.5 percent of the total debt for all U.S. families, including those with and without credit card debt. (Source: Federal Reserve Survey of Consumer Finances, February 2009)
• In 2007, fewer than half of U.S. families (46.1 percent) held credit card debt. That’s virtually unchanged from 2004’s 46.2 percent number. (Source: Federal Reserve Survey of Consumer Finances, February 2009)
• Undergraduates are carrying record-high credit card balances. The average (mean) balance grew to $3,173, the highest in the years the study has been conducted. Median debt grew from 2004’s $946 to $1,645. Twenty-one percent of undergraduates had balances of between $3,000 and $7,000, also up from the last study. (Source: Sallie Mae, “How Undergraduate Students Use Credit Cards,” April 2009)
• Balances on bank cards accounted for 87.1 percent of outstanding credit card balances in 2007, up from 84.9 percent in 2004. (Source: Federal Reserve Survey of Consumer Finances, February 2009)
• Of the 73.0 percent of families with credit cards in 2007, only 60.3 percent had a balance at the time of the interview; in 2004, 74.9 percent had cards, and 58.0 percent of these families had an outstanding balance on them. (Source: Federal Reserve Survey of Consumer Finances, February 2009)
• “Total bankcard debt per bankcard borrower” is $5,710. This was alternately described as the total balance of bank-issued credit cards per consumer. (Source: TransUnion, December 2008)
• The average American with a credit file is responsible for $16,635 in debt, excluding mortgages, according to Experian. (Source: U.S. News and World Report, “The End of Credit Card Consumerism,” August 2008)
• 76 percent of undergraduates have credit cards, and the average undergrad has $2,200 in credit card debt. Additionally, they will amass almost $20,000 in student debt. (Source: Nellie Mae, “Undergraduate Students and Credit Cards in 2004: An Analysis of Usage Rates and Trends.”)
• Average credit card debt among indebted young adults increased by 55 percent between 1992 and 2001, to $4,088. (Source: “Generation Broke: Growth of Debt Among Young Americans”)
• The average credit card indebted young adult household now spends nearly 24 percent of its income on debt payments, four percentage points more, on average, than young adults did in 1992. (Source: “Generation Broke: Growth of Debt Among Young Americans”)
• Among the 35 percent of college students with credit cards that do not pay their balances in full every month, the average balance is $452. This is down 19 percent from 2007. Moreover, this balance is approximately one-third the size of the average balance for active non-student young adult accounts and one-fourth the size of active accounts for older adults. (Source: Student Monitor annual financial services study, 2008)
• Total U.S. consumer debt (which includes credit card debt and noncredit-card debt but not mortgage debt) reached $2.56 trillion at the end of 2008, up from $2.52 trillion at the end of 2007. (Source: Federal Reserve’s G.19 report, February 2009)
• Total U.S. consumer revolving debt fell to $963.5 billion in December 2008. About 98 percent of that debt was credit card debt. (Source: Federal Reserve’s G.19 report, February 2009)
• As of 2007, the majority of U.S. households had no credit card debt. (Source: Federal Reserve Board survey of consumer finances, February 2009)
• When you take a snapshot of how much an individual bank cardholder has in debt on a given day, and ignore whether that debt will be paid off in the grace period, Alaska is the state whose cardholders have the highest debt: $7,827. Alaska is followed by Nevada at $6,636 and Tennessee at $6,568. At the other end of the scale, the states whose citizens carry the lowest card debt at a given moment are Iowa ($4,277), North Dakota ($4,403) and West Virginia ($4,517). (Source: TransUnion, December 2008)
• About 40 percent of credit cardholders carry a balance of less than $1,000. About 15 percent are far less conservative in their use of credit cards and have total card balances in excess of $10,000. When you look at the total of all credit obligations combined (except mortgage loans), 48 percent of consumers carry less than $5,000 of debt. This includes all credit cards, lines of credit and loans — everything but mortgages. Nearly 37 percent carry more than $10,000 of nonmortgage debt as reported to the credit bureaus. (Source: myfico.com)
• The typical consumer has access to approximately $19,000 on all credit cards combined. More than half of all people with credit cards are using less than 30 percent of their total credit card limit. Just over one in seven is using 80 percent or more of their credit card limit. (Source: myfico.com)
• The average college graduate has nearly $20,000 in debt; average credit card debt has increased 47 percent between 1989 and 2004 for 25-to 34-year-olds and 11 percent for 18-to 24-year-olds. Nearly one in five 18-to 24-year-olds is in “debt hardship,” up from 12 percent in 1989. (Source: Demos.org, “The Economic State of Young America,” May 2008)
• More than 90 percent of survey respondents believe they had the same amount — or less — debt as the average American. (Source: CreditCards.com survey, June 2007)
• Miami residents are the biggest overspenders, one study says. The 50 largest U.S. metropolitan areas were ranked in terms of percent of median yearly household income owed to credit card companies and Miami residents owed 22.61 percent. Tampa (17.1 percent) and Los Angeles (16.81 percent) came in second and third, respectively. (Source: Forbes.com, Equifax and US Census Bureau, April 2009)
• Anchorage, Alaska, has the highest credit card debt. (Source: Men’s Health magazine’s personal debt survey, July 2008)
• Lincoln, Neb., has the lowest credit card debt. (Source: Men’s Health magazine’s personal debt survey, July 2008)
• 28 percent of those surveyed say their ability to pay off their credit card balance has become more difficult. (Source: Javelin Strategy & Research, “Credit Card Issuer Profitability in a Difficult Economy,” July 2008)

Let’s take two different looks at this seemingly little problem.

1. Percent markup. If you stopped using your credit and started only paying down the balance, making minimum payments of 3 percent or $25 a month (whichever is more) on a balance of $10,679 at a 15 percent interest rate will take 188 months.

That translates into 15.6 years and extra payments of $7,284. So in the end, $10,679 worth of instant gratification costs you $17,963, or 68 percent more than the original cost. Next time you are oggling a fantastic consumer good that will absolutely complete you ask yourself if you are willing to pay 68 percent more. Makes it easier to say no, right?

Got a slightly different interest rate or balance? Calculate the big picture cost of your minimum payment.

2. Lost buying power. Ironically, the $7,284 you are giving to credit card companies to get the good things in life – STAT! – is money you could have spent on the good things in life…later.

That $7,284 in interest could buy over 15 years:

• One very fancy dinner every three months (at $140 per dinner)
• 145 pairs of new shoes (at $50 per pair)
• 18 months of groceries (at $400 per month)
• Approximately ten percent of your yearly IRA contribution
• 87,408 miles of driving in a car that gets 30 mpg at $2.50 per gallon

In order to avoid credit card debt, please follow our helping articles.