2019 American Household Credit Card Debt Study
Credit card debt continues to rise, but so does income for many Americans. Our annual analysis includes tips on reducing interest costs and prioritizing those balances.
By Erin El Issa
Dec. 2, 2019
Americans’ incomes have grown faster than the cost of living over the past decade, which is great news for many consumers’ budgets. But Americans’ consumer debt — including on auto loans, student loans and credit cards — continues to rise.
Credit card balances carried from one month to the next hit $443.96 billion in September 2019, according to NerdWallet’s annual analysis of U.S. household debt. Credit card debt has increased almost 6% in the past year and more than 34% in the past five years.
Some households are more likely to carry credit card balances than others. This year’s report looked at the costs of first-time parenthood and found that parents of children younger than 18 are more likely to carry credit card balances than are Americans with adult children or no children, according to a survey of 2,076 U.S. adults, commissioned by NerdWallet and conducted by The Harris Poll. Our survey also found that many Americans would have a hard time avoiding debt if they became first-time parents now.
Here’s the breakdown of what U.S. households owe, both in total and the average amount per household with each type of debt :
|Type of debt||Total owed by an average U.S. household with this debt||Total owed in the U.S.|
|* 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 $987 billion, which includes both revolving and transacting balances.|
|Any type of debt*||$136,355||$13.95 trillion|
|Credit cards (revolving)**||$6,849||$444 billion|
|Auto loans||$27,804||$1.3 trillion|
|Student loans||$46,822||$1.5 trillion|
Debt carried over from one month to the next is revolving debt and usually incurs interest charges. The average U.S. household with revolving credit card debt has an estimated balance of $6,849 , costing an average of $1,162 in annual interest .
Many Americans will likely pay credit card interest for a long time: 10% of Americans with credit card debt say it will take them longer than 10 years to pay it off, and 9% don’t think they’ll ever be completely free of it, according to our survey.
Despite the recent rate drops, credit card debt is still one of the most expensive forms of debt.Sara Rathner, NerdWallet's Credit Card Expert
- Medical costs are growing faster than income. Over the past 10 years, medical expenses have grown 33%, compared with median income growth of 30%, according to NerdWallet’s analysis of Bureau of Labor Statistics and U.S. Census Bureau data. 
- Parents are more likely to have credit card debt. In our survey, 4 in 5 parents of children under 18 (80%) said they have credit card debt, compared with 58% of survey respondents who aren’t parents of children under 18. About 1 in 10 parents with credit card debt (11%) said they think it will take them more than 10 years to be credit card debt-free.
- Americans are waiting to have children because of the cost. Nearly 2 in 5 Americans (37%) are delaying or have delayed having children for financial reasons, and roughly half of Americans who don’t have kids (48%) say the overall costs (from birth to age 18) associated with having a child would deter them from having any.
- Credit card interest adds up. U.S. households carrying credit card debt from month to month will pay interest of $1,162 , on average, this year. A couple with children will pay an average of $1,382 in annual credit card interest charges .
Income is outpacing most costs, but not this big one
After years of flat, negative or minimal movement, income growth has been outpacing the cost of living in recent years. While the cost of living has grown 19% in the past decade, the median household income has gone up 30%.  This can give consumers more room in their budgets to save, pay off debt or upgrade their lifestyle. But there is still one spending category that’s outpacing income: medical costs.
Since 2009, medical costs have gone up almost 33%.  People who don’t have insurance or who have insurance with high deductibles may be getting medical bills they can’t reasonably afford, and even insured Americans without significant health problems might feel the pinch of increasing medical expenses. They may opt to pay their medical bills with credit cards, incurring high interest charges, or leave the bills unpaid, damaging their credit scores in the process.
What consumers can do: Transfer balances and explore insurance options
For people with existing credit card debt for medical expenses or something else, minimizing interest costs should be a priority. Consumers with good credit — a FICO score of 690 or higher — may be able to get a 0% balance transfer card, which typically allows 12 to 18 months to pay off credit card balances without accruing interest.
“Look for a balance transfer card that gives you the longest amount of time to pay off your debt without interest, while charging you the lowest balance transfer fee possible,” says Sara Rathner, NerdWallet’s credit cards expert. “Some of the best options we’ve seen charge a 3% fee on the transferred balance and give you 18 months interest-free. Just be sure to time out your monthly payments so you’ll get your balance down to zero before the promotional rate ends, because after that, your interest rate will skyrocket.”
Transferring balances to an interest-free card can reduce the total cost of medical bills already incurred. Preventing high bills in the first place often requires health insurance. But as anyone who has struggled to find affordable health care coverage can attest, simply telling people to “get insured” is often unrealistic and oversimplifies the challenges. Still, some people who could get coverage are going without it.
Younger and healthier people who have access to insurance sometimes decline coverage because they see expensive premiums as unnecessary. The risk seems acceptable for those who haven’t had significant health problems, but one big medical issue can bankrupt a consumer — or force decisions based on affordability, rather than on health.
Most Americans get health insurance through their employer or a government program like Medicare, according to the most recent data from Kaiser Family Foundation. For those who don’t have access to such coverage, see NerdWallet’s guide to choosing a health insurance plan.
Americans underestimate first-time parenting costs
In our survey, Americans estimated that the average U.S. couple would spend a total of $14,081, on average, to prepare to become first-time parents through the first year of parenthood nowadays. Almost half of Americans (46%) say the average couple would spend less than $10,000 in total. In fact, it can cost a lot more than either of those estimates during pregnancy and the first year of parenthood.
Some delay having children due to the expense
Nearly 2 in 5 Americans (37%) say they are delaying or have delayed having a child or children for financial reasons, our survey found, and roughly half of Americans (48%) without children say the overall costs (from birth to age 18) associated with having a child would deter them from having any children.
There’s good reason for such trepidation: Three months of unpaid parental leave alone — calculated as a quarter of the median annual income in the U.S. — would cost $8,516 pretax, according to NerdWallet’s analysis. 
If a child was in day care for the remaining nine months of their first year, it would cost another $8,565, on average. This amount varies widely, depending on where a parent lives and the child care options available. In Mississippi, for example, nine months of child care costs $4,077, on average, while in Washington, D.C., it costs an average of $18,182. 
For many, just the lost wages and child care costs already exceed the $14,000 average estimate of the total costs of preparing for first-time parenthood in the child’s first year that Americans cited in our survey. And this amount is before medical bills, formula, clothing, diapers, baby gear, or a larger home or car — more than half of Americans (52%) say they would need to take on additional housing costs, and over 2 in 5 (43%) would need to take on additional transportation costs in preparation for their child’s arrival if they became a first-time parent now.
These costs all add up, and not every budget can reasonably accommodate them. Many first-time (and second- or third-time) parents reach for credit cards to cover expenses. In our survey, 4 in 5 parents of children under 18 (80%) said they have credit card debt, compared with 58% of survey respondents who aren’t parents of children under 18. Roughly 1 in 10 parents of children under 18 who have credit card debt (11%) think it will take them more than 10 years to be free of credit card debt.
Would-be first-time parents want to avoid debt, but probably can’t
Almost half of Americans (48%) say avoiding incurring additional debt would be one of their top financial priorities outside covering monthly living expenses/basic necessities if they were to become a first-time parent now; 46% say they would prioritize paying down/off existing debt. More than half of Americans (56%) say they would prioritize saving for their child’s education, according to our survey.
You can borrow money for college, but there’s no such thing as a retirement loan. If you don’t begin saving for yourself, you put your ability to support yourself in retirement at risk.Sara Rathner, NerdWallet's Credit Card Expert
These are all admirable goals, but here’s the reality: Roughly two-thirds of Americans (67%) say if they were to become a first-time parent now, they would need to put costs associated with preparing for their child’s arrival on a credit card. Close to half of them (44%) say they wouldn’t be able to pay off their balance in full when thinking about the total amount they would need to put on a credit card.
What consumers can do: Prioritize paying off debt and retirement over college savings
Reducing debt and saving for retirement are two of the best actions to take for financial security. Although 3 in 5 Americans (60%) think that parents should pay for their children’s post-secondary education expenses even if it means saving less for retirement, it’s recommended that consumers don’t forgo saving for their golden years.
“You can borrow money for college, but there’s no such thing as a retirement loan. If you don’t begin saving for yourself, you put your ability to support yourself in retirement at risk,” Rathner says. “It’s a tremendous gift to be able to fund your child’s education, but doing so may mean you’ll become a financial burden on your kids when they’re older and are supporting their own children.”
Pay off your debt as aggressively as possible so your budget doesn’t have to be affected by the Fed’s decisions.Sara Rathner, NerdWallet's Credit Card Expert
Credit card interest adds up
Credit card debt is one of the costliest kinds of debt, and that’s true even after a few rounds of rate-cutting by the Federal Reserve this year. As of August 2019, the average APR on credit card accounts accruing interest was 16.97%, according to the Federal Reserve Bank of St. Louis. Households with credit card debt carry an average balance of $6,849 as of September 2019 , which means interest paid over the course of a year is about $1,162. 
A couple with children carries an average credit card balance of $8,145, which would cost $1,382 in interest costs over the course of a year.  That’s about 19% higher in interest paid than the average household with credit card debt.
“Lower interest rates are not an open invitation to take a break from repaying your debt. Despite the recent rate drops, credit card debt is still one of the most expensive forms of debt,” Rathner says. “Plus, rates are variable, so what goes down can certainly come back up. Pay off your debt as aggressively as possible so your budget doesn’t have to be affected by the Fed’s decisions.”
What consumers can do: Make extra payments to reduce interest and cut expenses
Not everyone can transfer credit card debt to an interest-free card, particularly if they don’t have good credit (a FICO score of at least 690). Another way to lower costs on an interest-assessing credit card account is by making multiple payments every month.
Credit card interest is calculated on the account’s average daily balance, not the balance on the payment due date or the statement closing date. By making more than one payment in the month, the average daily balance is lower and so is the interest assessed on it, even if the payment total isn’t more each month.
For parents, many costs — like child care, medical expenses and baby gear — are inevitable. Examine your budget for any unnecessary expenses carried over from your pre-kid life and cut back where you can to pay off credit card debt.
The survey was conducted online by The Harris Poll for NerdWallet from Sept. 19-23, 2019, among 2,076 U.S. adults ages 18 and older. This online survey isn’t based on a probability sample, so no estimate of theoretical sampling error can be calculated. For complete survey methodology, including weighting variables and subgroup sample sizes, contact [email protected].
NerdWallet’s analysis includes data from the following sources:
- Household Debt and Credit, September 2019, by the Federal Reserve Bank of New York’s Center for Microeconomic Data.
- Families and Households, December 2018, by the U.S. Census Bureau.
- 2016 Survey of Consumer Finances, from the Board of Governors of the Federal Reserve System.
- Revolving and transacting bank-card balances, June 2019, via email from Experian, one of the major credit reporting agencies in the U.S.
- Consumer Price Index, September 2019, from the U.S. Bureau of Labor Statistics.
- Historical Income Tables: Households, August 2019, from the U.S. Census Bureau.
- The Cost of Child Care, July 2019, by the Economic Policy Institute, a nonprofit think tank focusing on the needs of low- and middle-income workers in economic policy discussions.
- Real Median Personal Income in the United States, 2018, from the Federal Reserve Bank of St. Louis.
- Commercial Bank Interest Rate on Credit Card Plans, Accounts Assessed, August 2019, from the Federal Reserve Bank of St. Louis.
 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, using 2019 projections based on 2018 U.S. Census Bureau data, by the percentage of households holding that debt, based on data from the 2016 Survey of Consumer Finances.
 Revolving credit card debt is calculated differently from other types of household debt. The Federal Reserve Bank of New York uses credit reporting data from Equifax, one of the major credit reporting agencies in the U.S., as the source of its credit card debt data and includes 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. — $987 billion — by the percentage of revolving debt. (According to the New York Fed, the nation’s households had outstanding credit card balances of $881 billion as of September 2019, 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 $881 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 (using 2019 estimates based on 2018 U.S. Census data), by the percentage of households holding that debt (using 2019 estimates based on 2016 data from the Federal Reserve’s Survey of Consumer Finances).
 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 2019. 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.
 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 215.861 to 256.358 and the medical price index increased from 378.359 to 502.301 from September 2009 to September 2019. To compare the increase in the price index categories with income growth since 2009, we projected a 2019 median household income based on the rate of growth over the past 10 years. Based on census data, the median household income was $49,777 in 2009; our projections show a median household income of $64,875 for 2019.
 To estimate credit card interest over the course of a year for a couple with children, we used demographic data about credit card debt from the 2016 Survey of Consumer Finances, and scaled it up to our 2019 estimates for revolving credit card debt. Assuming an interest rate of 16.97%, we estimate that these households would owe an average of $1,382 in annual credit card interest.
 To estimate lost wages from three months of unpaid leave, we used median personal income data from the Federal Reserve Bank of St. Louis to project a median personal income for 2019 based on the rate of growth over the past 10 years. Our projections show an annual median personal income of $34,062 for 2019, or $8,516 over three months.
 To estimate the cost of child care, we averaged state data from the Economic Policy Institute to get an annual child care cost of $11,420, or $8,565 over nine months. The institute used 2017 data from Child Care Aware of America and inflated it based on the 2018 CPI-U-RS (Consumer Price Index research series using current methods) average to get 2018 state numbers.
The highest and lowest average child care costs across the U.S. were found in Washington, D.C., and Mississippi. The costs are $24,243 and $5,436, respectively, per year, or $18,182 and $4,077 over nine months.