American Household Credit Card Debt Statistics through 2012
Average credit card debt stands at a distressing $7,073 - a startling number considering that if you look at only those households that have debt, the average rises to $15,162. And the American debt profile only gets worse. Here are statistics, trends, studies and methodology behind the average U.S. household debt.
Current as of May 2013
U.S. household consumer debt profile:
- Average credit card debt: $15,162
- Average mortgage debt: $147,967
- Average student loan debt: $33,445
In total, American consumers owe:
- $11.25 trillion in debt
- A decrease of 1.2% from last year
- $846.2 billion in credit card debt
- $7.88 trillion in mortgages
- $1,028.3 billion in student loans
- An increase of 12.5% from last year
Deep dive: credit card debt
Credit card debt is the third largest source of household indebtedness. Only the mortgage and student loan debt markets are larger. Here are the latest credit card debt statistics from the Federal Reserve:
|Total Credit Card Debt||Average Household Credit Card Debt||Average Indebted Household Debt|
|March 2013||$846.2 billion||$7,073||$15,162|
|Change from February||-0.21%||-0.28%||-0.28%|
|Change from March 2012||-0.77%||-1.58%||-1.58%|
|Change from February, annualized||-2.54%||-3.35%||-3.35%|
What lower credit card debt means for the economy
What does this mean? Credit card debt is holding fairly steady – but whether or not that’s a good thing is up for debate. On the one hand, higher consumer spending puts the economy on a positive track. Higher spending leads to more jobs and higher incomes, which in turn lead to higher spending. However, if wages and employment are improving at this sluggish pace, this might well be an indication that families are borrowing to make ends meet rather than a reflection of a well-founded increase in consumer confidence.
Read on for statistics, data, methodology and conclusions on the state of U.S. credit card debt.
|March 31, 2010||December 30, 2012|
|Total revolving debt||$906.7 billion||$849.8 billion|
|Number of U.S. households||116,716,292||119,397,330*|
|Average credit card debt per household||$7,768||$7,117*|
|% of households with a credit card balance||43.2%||46.7%|
|Average credit card debt per indebted household||$17,630||$15,257|
*NerdWallet estimates; see methodology section for details.
In March 2010, the last date at which the data can be reliably estimated, we found that:
- The median American household owed $3,300 of consumer debt;
- The average American household owed $7,768 and
- The average indebted American household owed $17,630.
Note that the average American household owed far more than the median, and also that the average indebted household owed far more than the average household overall. Such large discrepancies indicate that a relatively small number of households were deeply underwater.
Two things stand out: overall credit card debt is down, and the average indebted household is less underwater relative to the average overall than before.
Falling indebtedness is largely due to defaults rather than repayment
Between 2006 and 2008, credit card debt rose steadily and reached its height in January 2009, six months into the financial crisis, as unemployment soared and defaults began in earnest. From there, average debt loads took a sharply downward trajectory and dipped below 2006 levels in mid-2010. 2011, however, saw the decline in average debt become a plateau, and debt levels have since then hovered around $15,600. There is a broad consensus on why indebtedness rose during the boom years: low interest rates and easy access to credit brought Americans to take on record levels of debt. However, the data still leaves two questions:
- Why did indebtedness decline in 2009 and 2010?
- Why has indebtedness plateaued since then?
Why did indebtedness fall in 2009 and 2012? Ideally, debt levels would have fallen because newly frugal Americans paid off their credit card balances. However, a number of not-so-pleasant factors contributed to the decline. In 2010, credit card companies wrote off seriously delinquent debts in earnest, lowering the total amount of revolving credit card debt. The charge-off rate – the percentage of dollars owed that issuers have written off as uncollectable – rose to 10.9% in the second quarter of 2010. This represented an increase of over 300% from the first quarter of 2006, when the charge-off rate was only 3.1%. Charge-offs account for a significant portion of the debt reduction.
The graph says it all: between the fourth quarter of 2009 and the fourth quarter of 2010, average household debt fell by $2,722. The speed with which average debt fell indicates that loans were written off, rather than paid off. As a result of those losses, spooked credit card companies tightened their purse strings. Stricter lending standards also contributed to a fall in total credit card debt. Those two factors – fewer loans, made to more creditworthy consumers – are troubling, as they speak to a one-off correction rather than an improvement in underlying factors such as increased income or fiscal prudence.
Why did indebtedness plateau in 2011? As the economy limps forward, credit card companies increasingly loosen their lending standards. Confident that consumers will be able to pay off their debts, the issuers allow more people to borrow more money. NerdWallet expects household indebtedness to resume an upward trend in the coming years as creditors become more lenient.
Household indebtedness estimates can only be considered reliable when three sets of data were released at approximately the same time:
- The U.S. Census, taken by the federal government every 10 years, tells us how many American households there are;
- The Aggregate Revolving Consumer Debt Survey, taken monthly by the Federal Reserve, tells us how much debt is outstanding, in total; and
- The Survey of Consumer Finances, taken by the Federal Reserve every 3-5 years, tells us the percentage of families with credit card debt.
The last date at which this occurred was March 31st, 2010. To estimate consumer debt in June of 2012, we extrapolated from the following data sets:
- The 2010 U.S. Census (2 years out of date)
- The 2009 Survey of Consumer Finances (3 years out of date)
We also use the Aggregate Revolving Consumer Debt survey, which is current. Mortgage, student loan and auto loan data come from the New York Federal Reserve’s Household Credit Report.
Notes about 2012 data:
NerdWallet used a straight-line extrapolation to estimate the number of household units each month, based on census estimates from 2005 as well as official census data from 2010.
The percentage of credit card approval rates is updated every few years by the Federal Reserve, and was last published in March 2011 covering a survey period from 2007 to 2009. NerdWallet’s monthly estimates of this figure are based on internal data of credit card approval rates.
Average U.S. household credit card debt by quarter, 2006-2012
|Quarter||Average debt/household||Average debt/
Average U.S. household credit card debt by year, 2006-2012
|Year||Average debt/household||Average debt/