NerdWallet's
2017 American Household Credit Card Debt Study
As Americans' credit card balances continue to climb, many blame their own debt on unnecessary spending. That's actually good news: It means they can take steps to stop buying, pay down their balances and cut their interest costs.
By Erin El Issa
Americans’ total credit card debt continues to climb, reaching an estimated $905 billion — an almost 8% increase from the previous year — according to a NerdWallet analysis. [1]
Finding a way to put money toward paying off debt, especially high interest debt, is the best way to free yourself from the vise grip debt can have on your budget.
Charging medical bills to credit cards can seem like a simple solution, but it can actually lead to even bigger headaches down the road.
To reduce the amount of interest you’re paying, consider making payments more frequently.
Methodology
The online survey was conducted Nov. 8-10, 2017, in the U.S. by Harris Poll on behalf of NerdWallet. The survey of 2,089 U.S. adults ages 18 and older included 1,201 who have ever been in credit card debt. 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 [email protected].
NerdWallet’s analysis included the following data from:
- Board of Governors of the Federal Reserve System. “2016 Survey of Consumer Finances.”
- U.S. Bureau of Labor Statistics. “Consumer Price Index”, September 2017
- Federal Reserve Bank of New York. “The Center for Microeconomic Data”, September 2017
- Federal Reserve Bank of St. Louis. “Commercial Bank Interest Rate on Credit Card Plans, Accounts Assessed”, August 2017
- The Henry J. Kaiser Family Foundation. “Data Note: Americans’ Challenges with Health Care Costs”, March 2017
- Peterson-Kaiser Health System Tracker. “Health System Dashboard”, 2015
- U.S. Census Bureau. “Families and Households”, December 2016
Footnotes
[1] This $905 billion total is a NerdWallet-adjusted version of the Federal Reserve Bank of New York’s Household Debt and Credit report data. According to the New York Fed, the nation’s households had outstanding credit card balances of $808 billion as of September 2017. To this number, we added 25% of reported “other” debt as of September 2017; the New York Fed Consumer Credit Panel/Equifax said that about a quarter of “other” debt is outstanding retail credit card debt.
[2] CPIs, or consumer price indexes, measure changes in price for a set of consumer goods and services. The eight CPI groups are housing, transportation, food and beverages, medical care, apparel, education and communication, recreation, and other goods and services. According to the U.S. Bureau of Labor Statistics, the medical CPI grew from 354.531 to 476.696 from September 2007 to September 2017, and food and beverage CPI increased from 205.347 to 250.64. To compare the increase in the CPI categories with income growth since 2007, we projected a 2017 median household income based on the rate of growth over the past 10 years. Our projections show a median income of $50,233 in 2007 and $60,108 in 2017.
[3] According to the U.S. Census Bureau, the U.S. population was 323,127,513 as of July 1, 2016, and 22.8% of the population was under age 18. We took the adult population multiplied by 29% (percentage of Americans who reported problems paying medical bills, according to Kaiser Family Foundation) multiplied by 37% (percentage of those Americans who increased their credit card debt to help pay medical bills) to get 26,766,461 — the approximate number of Americans who put medical bills on a credit card.
[4] We used Peterson-Kaiser Health System Tracker’s average out-of-pocket spending per capita as of 2015 and the estimated average credit card APR of 14.87% from the Federal Reserve Bank of St. Louis. We assumed a minimum monthly payment of 3% of the balance, or $20, whichever was higher. Total individual interest was $471.19 and total U.S. interest was $12,612,083,532.56.
[5] We used consumer-reported data from the Federal Reserve’s Survey of Consumer Finances and revolving credit card balance data from Experian as of June 2017 to estimate revolving debt based on household income. We used the estimated average credit card APR of 14.87% from the Federal Reserve Bank of St. Louis to calculate the amount of interest each household would pay.
[6] According to the Bureau of Labor Statistics, the total CPI grew from 208.547 to 246.373 from September 2007 to September 2017.
[7] According to the Bureau of Labor Statistics, the other goods and services CPI grew from 335.072 to 434.01 from September 2007 to September 2017. The housing CPI grew from 210.5 to 252.444 during that same period.
[8] We used consumer-reported data from the Survey of Consumer Finances and revolving credit card balance data from Experian as of June 2017 to estimate revolving debt based on household income. We used the estimated average credit card APR of 14.87% from the Federal Reserve Bank of St. Louis to calculate the amount of interest each household would pay. Households headed by an employee working for someone else owed $5,672 in credit card debt and paid annual interest of $843 on credit cards. Households led by someone self-employed owed $8,026 in credit card debt and paid annual interest of $1,194. Households led by someone retired owed $4,598 in credit card debt and paid annual interest of $684.
[9] We used consumer-reported data from the Survey of Consumer Finances and revolving credit card balance data from Experian as of June 2017 to estimate revolving debt based on household income. We used the estimated average credit card APR of 14.87% from the Federal Reserve Bank of St. Louis to calculate the amount of interest each household would pay. Renters or other owed $3,611 in credit card debt and paid annual interest of $537. Homeowners owed $6,729 in credit card debt and paid annual interest of $1,001.
[10] Adding a potential Fed rate increase of 0.25 percentage point to the average credit card APR of 14.87%, the average household would owe $919 in credit card interest per year.