2021 American Household Credit Card Debt Study
The second year of the pandemic has made it clear that financial recovery will be slow for many, as the cost of living keeps rising while average household income has fallen.
By Erin El Issa
Jan. 11, 2022
The pandemic continues, as does the financial strain it has placed on many Americans. Total debt has increased over the past 12 months, although revolving credit card debt is down, and the cost of living is growing faster than household incomes.
NerdWallet’s annual look at credit card and other forms of household debt finds that credit card balances carried from month to month are down significantly — almost 14% — from a year earlier, falling to $357 billion as of September 2021.  But all other debt types tracked by the study, including mortgage, auto and student loan debt, increased over the past 12 months, as did overall debt. And overall credit card debt — meaning all balances, not just those carried over from one month to the next — is steadily increasing again.
Here’s the breakdown of what U.S. households owed, both in total and the average amount per household with each kind of debt, as of September 2021 :
|Type of debt||Total owed by an average U.S. household with this debt||Total owed in the U.S.||Percentage change for total owed between 2020 and 2021|
|* This debt can include mortgages, home equity lines of credit, auto loans, credit cards, student loans and other household debt, according to the Federal Reserve Bank of New York. **The credit card debt figures in this chart represent revolving credit card balances — those that are carried from month to month — rather than all credit card balances. Total U.S. credit card outstanding debt stands at $910 billion as of Sept. 2021, which includes both revolving and transacting balances.|
|Any type of debt*||$155,622||$15.24 trillion||6.20%|
|Credit cards (revolving)**||$6,006||$357.04 billion||–13.85%|
|Auto loans||$28,882||$1.44 trillion||6.10%|
|Student loans||$59,042||$1.58 trillion||2.46%|
Our annual study analyzes government data — including statistics from the U.S. Census Bureau and the Federal Reserve Bank of New York — to track the changes in household debt over the past year. For further insight on how the pandemic continues to affect the finances of Americans, NerdWallet commissioned an online survey of more than 2,000 U.S. adults conducted by The Harris Poll. The survey found that of Americans who received pandemic relief since March 2020, 22% used at least some of it to pay off/down credit card debt, which could partially explain the drop in revolving credit card debt over the past year.
- The cost of living has been rising faster than income in recent years. Median household income has fallen 3% over the past two years, while the overall cost of living is up 7%.  This is a sharp reversal of a decade-long trend in which income growth has exceeded inflation, although incomes are still ahead of the cost of living if you look at the 10 years starting in 2011.
- Americans who have been financially struggling over the past year point to both lower income and higher expenses. More than a third of Americans (35%) say their household financial situation has gotten worse over the past 12 months, according to the survey. Of that group, 38% say it’s because their household income decreased overall, and 36% say it’s because their household expenses increased overall. More than 1 in 5 of those whose finances have worsened (21%) say it’s because they lost their job.
- Top uses of pandemic relief include paying for necessities and savings. The survey shows that more than three-quarters of Americans (78%) have received some form of pandemic relief since March 2020. The top uses they say they found for this money were paying for necessities (43%) and adding it to their savings (43%).
- Because of lower revolving balances, average credit card interest is down. U.S. households that carry credit card debt will pay interest charges of $1,029, on average, this year. 
- Credit cards helped some Americans through the pandemic. The survey found that close to 1 in 5 Americans (18%) relied on credit cards to pay for necessities during the pandemic, and 17% relied on them for emergencies during this time. While carrying debt on a credit card is usually an expensive proposition due to interest, cards can be a lifeline in a challenging situation — like a pandemic.
Cost of living growth has begun to outpace median incomes
Compared with 2011, median household income is up 33%, while the overall cost of living has increased by 21%, according to government data.  On the surface, this seems to suggest that income is easily keeping up with expenses, but upon closer inspection, this isn’t necessarily the case. Over the past two years, median income has actually gone down — decreasing 3% — while the overall cost of living has increased by almost 7% in that time frame.  And decade-long trends show dramatic growth in two of the biggest living costs: housing and medical expenses.
The past year and a half was already tough for the millions of Americans who lost jobs… It remains difficult for many to catch up.Sara Rathner, NerdWallet's Credit Cards Expert
While income has grown faster than both of these categories over the span of a decade, it hasn’t outpaced either by much, with housing costs growing by 29% and medical expenses growing by 31% during that time. 
The results of NerdWallet’s survey attest to how the combination of lower incomes and higher costs is affecting the household finances of some Americans. According to the survey, more than a third of Americans (35%) say their household financial situation has gotten worse over the past year. When asked why, 38% say their overall household income decreased and 36% say their overall household expenses increased.
The spike in consumer prices has been a regular discussion in the media recently. A trip to the grocery store, gas station or used car lot highlights the inflation in prices for some of the most common line items in Americans’ budgets.
“The past year and a half was already tough for the millions of Americans who lost jobs. Now, we’re faced with rising costs for much-needed items — food, housing, gas, transportation and medical care,” says Sara Rathner, credit cards expert at NerdWallet. “It remains difficult for many to catch up.”
Americans say their finances have changed in the last year
As noted above, 35% of Americans report that their household financial situation has gotten worse over the past 12 months. A quarter of Americans (25%) say their household financial situation has gotten better during this time frame, and 40% say their household financial situation has remained the same.
Financial inequality in the U.S. isn’t new, but the pandemic has exacerbated it. And unsurprisingly, households with lower income are more likely to have struggled financially over the past year — Americans with a household income of less than $50,000 are most likely to say their financial situation has gotten worse.
Financial situation changes over the past year, by household income
|Less than $50K||$50K - $74.9K||$75K - $99.9K||$100K+|
|My household financial situation has gotten better||15%||18%||24%||36%|
|My household financial situation has stayed the same||38%||43%||45%||39%|
|My household financial situation has gotten worse||47%||39%||32%||26%|
|Source: NerdWallet survey conducted online Nov. 9-11, 2021, by The Harris Poll. Respondents include 2,036 Americans, who were asked if their household financial situation had gotten better or worse over the past 12 months.|
Aside from an overall decrease in household income and an overall increase in expenses, some of the top reasons why some Americans’ finances have gotten worse are a specific, unexpected large expense (25%) and job loss (21%).
Meanwhile, Americans whose household finances have gotten better over the past 12 months report opposite experiences. More than half of those with better finances (53%) say it’s because their household income increased overall, and 24% say it’s because their household expenses decreased.
The pandemic’s continuing impact on American finances
The COVID-19 pandemic has affected Americans’ finances in multiple ways. One such way is the relief and stimulus programs available over the past almost two years.
According to our survey, more than three-quarters of Americans (78%) reported that they had received some form of pandemic relief since March 2020. Close to two-thirds of Americans (64%) say they received stimulus payments, and some Americans received extended/supplemental federal unemployment benefits (17%), the expanded child tax credit (13%) and automatic forbearance on federal student loans (9%), among other things.
Of Americans who received pandemic relief, 43% say they used the extra money to pay for necessities, and another 43% say they saved some or all of the money. Close to 2 in 5 Americans who received pandemic relief (37%) repaid debt with this money.
Some Americans took big steps over the past 12 months that will affect their finances in the long term, for better or worse. More than 1 in 10 Americans (11%) say they purchased a home over the past year, and the same proportion (11%) say they enrolled in college courses or continuing education during that time. Around 1 in 12 Americans (8%) say they quit their job in the past 12 months, with Gen Zers (ages 18-24) and millennials (ages 25-40) more likely to say this than Gen Xers (ages 41-56) and baby boomers (ages 57-75). Those saying they quit a job include 16% of Gen Zers, 11% of millennials, 6% of Xers, and 3% of boomers.
Many relied on credit cards during the pandemic
Despite data from the Federal Reserve Bank of St. Louis showing an overall increase in credit card interest rates, the average annual amount of credit card interest paid by households carrying balances dropped slightly this year — from $1,155 in 2020 to $1,029 in 2021  — because of an overall reduction in household revolving credit card debt. But not every cardholder saw their debt decrease. According to NerdWallet’s survey, some Americans leaned on their credit cards to get through the pandemic.
One in 5 Americans (20%) report increasing their overall credit card debt during the pandemic. Additionally, 18% of Americans say they relied on credit cards to pay for necessities during the pandemic and 17% say the same thing about paying for emergencies.
Under normal circumstances, it goes against most financial advice to carry a credit card balance or rely on credit cards to cover emergencies. But the last two years have been anything but normal. One of the benefits of establishing good credit is being able to lean on it in tough times, and for many, credit cards may have been the thing that kept food on the table and the lights on. And that’s completely OK.
If your financial situation has stabilized, a great 2022 goal would be to pay down debt and build up savings. If that’s not a possibility for you yet, it’s OK to spend the year recovering and setting more modest goals.Sara Rathner, NerdWallet's Credit Cards Expert
What consumers can do
The pandemic isn’t over, and neither is its financial impact on millions of Americans. If treading water financially right now is all that’s possible for you, that’s understandable. But if you have more breathing room, there are some steps you can take toward getting your finances back on track.
Adjust your budget. While the pandemic continues, the relief programs have mostly ended, with the automatic forbearance on federal student loans ending in a few months. If you haven’t yet revisited your budget to account for such changes, do it now. Figure out whether your income can reasonably cover your expenses going forward. If not, aim to make cuts to your expenses or seek out programs to help you balance your budget. This may mean switching your federal student loan payments to an income-based repayment plan or seeking COVID-related mortgage forbearance.
“If you’re getting out of the house more now than before, it’s tempting to spend on all the things you denied yourself over the past 18 months,” Rathner says. “It’s OK to treat yourself, but create a spending plan first. Make space in your budget not just for savings, debt repayment and necessary expenses, but also for fun. That can help you stay on track without feeling like you have to deprive yourself.”
Pay more than the minimum on your credit card debt. Sometimes it’s all we can do to make the minimum monthly payments on debt. But if you can come up with extra cash to pay more than the minimum, seemingly small amounts can make a huge difference in how long it takes you to eliminate your balance and the amount of interest you’ll pay.
Say you have a credit card balance of $2,000 and a minimum monthly payment of $30. If you pay just the minimum, it would cost you more than $4,400 in interest and take around 18 years to pay it off. By doubling the payment to $60, you’d save about 14 years and more than $3,600 in interest.
Save up a dedicated emergency fund. When the pandemic began, many credit card companies slashed cardholders’ credit limits, and fewer applications for new cards were approved. This underscored why you can’t rely on a credit card to serve as your rainy-day fund. Your issuer can cut your limit at any time, leaving you without the available credit you planned to use in case of emergency.
According to NerdWallet’s survey, close to 3 in 10 Americans who received pandemic relief (29%) saved at least some of this for emergencies. Even if your household has recovered financially from the pandemic, continue to maintain an emergency fund. The last two years have shown the importance of shoring up cash for the unexpected.
Experts recommend an emergency fund with enough money to cover three to six months’ worth of expenses, but even a starter fund of $500 or $1,000 can provide a lot of peace of mind. Then keep adding to it — whether you can contribute $5, $50 or $500 per month — with the aim of building toward that three to six month goal.
“You hear about how necessary it is to plan for the unexpected, and nothing’s more unexpected than a global pandemic. This has been a true wake-up call,” Rathner says. “If your financial situation has stabilized, a great 2022 goal would be to pay down debt and build up savings. If that’s not a possibility for you yet, it’s OK to spend the year recovering and setting more modest goals. No matter what you do, just be kind to yourself.”
This survey was conducted online within the United States by The Harris Poll on behalf of NerdWallet from Nov. 9-11, 2021, among 2,036 U.S. adults ages 18 and older. This online survey is not based on a probability sample and therefore no estimate of theoretical sampling error can be calculated. For complete survey methodology, including weighting variables and subgroup sample sizes, please contact Lauren Nash at [email protected].
NerdWallet’s analysis includes data from the following sources:
- Household Debt and Credit, September 2021, from the Federal Reserve Bank of New York’s Center for Microeconomic Data.
- Families and Households, December 2020, from the U.S. Census Bureau.
- 2019 Survey of Consumer Finances from the Board of Governors of the Federal Reserve System.
- Revolving and transacting bank-card balances, June 2021, via email from Experian, one of the major credit reporting agencies in the U.S.
- Consumer Price Index, September 2021, from the U.S. Bureau of Labor Statistics.
- Historical Income Tables: Households, December 2020, from the U.S. Census Bureau.
- Employment Cost Index Historical Listing – Volume IV, September 2021, from the Bureau of Labor Statistics’ National Compensation Survey.
- Commercial Bank Interest Rate on Credit Card Plans, Accounts Assessed Interest, August 2021, from the Federal Reserve Bank of St. Louis.
 Revolving credit card debt is calculated differently from other types of household debt. The Federal Reserve Bank of New York uses data from Equifax, one of the major credit reporting bureaus in the U.S., as the source of its credit card debt data and includes both revolving balances (debt carried from month to month) and transacting balances (debt that will be paid off at the next statement). We estimated the amount of revolving debt by using data from the credit bureau Experian to determine balances that were revolved and transacted on bank credit cards. Data about revolving balances on retail credit cards wasn’t available, so we assumed that cardholders revolved debt on retail credit cards and bank credit cards at the same rate. Then, we multiplied the total outstanding credit card balances in the U.S. — $910 billion as of September 2021 — by the percentage of revolving debt. (According to the New York Fed, the nation’s households had outstanding credit card balances of $804 billion as of June 2021, which includes debt on bank credit cards but not retail credit cards. To make this number more representative of all credit card debt, we took the $804 billion and added it to 25% of reported “other” debt; the Federal Reserve Bank of New York says about a quarter of so-called other debt is outstanding retail credit card debt.) Finally, we divided this amount by the number of households carrying revolving credit card debt. We estimated the number of households by multiplying the total number of U.S. households, projected based on data released at the end of 2020, by the percentage of households holding that debt (using 2021 estimates based on 2019 data from the Federal Reserve’s Survey of Consumer Finances).
 To calculate household debt for each debt category — with the exception of credit card debt — we took the average amount of each type of debt reported by the Federal Reserve Bank of New York and divided it by the number of households with that type of debt. We estimated the number of households by multiplying the total number of U.S. households, projected based on data released at the end of 2020, by the percentage of households holding that debt, based on data from the 2019 Survey of Consumer Finances.
 Consumer price indexes measure changes in price for a set of consumer goods and services. The price indexes we surveyed include prices for apparel, education and communication, food and beverage, food at home, food away from home, housing, medical, other goods and services, recreation and transportation. According to the U.S. Bureau of Labor Statistics, the price index of all items grew from 256.532 to 274.138 from September 2019 and September 2021. To compare the increase in the price index categories with income growth since 2011, we projected a 2021 median household income using the 2020 median reported income of $67,521 and increasing or decreasing it by the quarterly percent changes reported in the Bureau of Labor Statistics’ Employment Cost Index data for civilian workers. Based on census data, the median household income was $68,703 in 2019, and our projections show a median household income of $66,438 for 2021.
 To determine credit card interest over the course of a year, we used our estimate of revolving credit card debt and data of the average interest rate on credit card accounts assessed interest from the Federal Reserve Bank of St. Louis from August 2021. Assuming a constant balance, we multiplied the average revolving credit card debt among households with credit card debt by the average APR. This is just an estimate — for simplicity, our calculations don’t account for daily compounding or fluctuating balances.
 According to the U.S. Bureau of Labor Statistics, the price index of all items grew from 226.597 to 274.138 from September 2011 to September 2021. Based on census data, the median household income was $50,054 in 2011; our projections show a median household income of $66,438 for 2021. Housing CPI increased from 220.152 to 283.505 between September 2011 and September 2021, and medical CPI increased from 402.202 to 525.585 during that time.