Blogging for Change

What's a Normal Amount of Credit Card Debt?

by Jesse Campbell on
11/19/2024
in Using Credit , Repaying Debt
Young man sitting at cafe making credit card payment on phone.

Credit card debt is a pretty normal part of American life. It's not something to feel bad about or to panic over. 

But, like anything else, it's fair to wonder how you stack up against everyone else. Your situation is unique (like you), but if you're way out of line with what's "normal" that may be a sign that things are getting away from you.

With that mind, let's consider your personal debt situation: how do you compare to the national average, and is there any reason to be worried about your debt?

Average credit card debt is on the rise

The average adult consumer in the United States is carrying a credit card balance of over $6,500. Gen X consumers (ages 43 to 58) are leading the way with an average credit card balance of over $9,000.  

Those number have been on the rise in recent years. So if you're feeling like you've been leaning on your credit cards more frequently, you're not alone. 

Inflation, rising costs, and stagnant wages have left a lot of families struggling to make ends meet. Credit cards can be a helpful tool to manage those shortfalls, but only as a short-term solution. If your credit card debt is perpetually rising, it may be time to make some significant changes. 

Can you support your credit card debt?

Rather than comparing your debts to anyone else, you're much better off asking yourself how much credit card debt you can actually afford. Because there's only so much money to go around each month, it's important to make sure that your debt payments aren't crowding out your other essential needs.

Debt-to-income ratio isn't a perfect measurement, but it's a helpful tool when trying to understand your current relationship with debt. Simply put, it measures the amount of your income that goes toward debt payments. You can use this debt-to-income calculator to find your ratio. The higher the number, the larger a percent of your money is going to debt repayment. There's no "bad" ratio, exactly, but as you drift closer to 40% and above you may find that lenders especially consider you to be risky and may not be willing to extend you additional credit.

Is your debt healthy?

Ultimately, the important question isn’t really, “What’s a normal amount of credit card debt to carry?” It’s “What’s a healthy amount for me to carry?” To know that, you first have to answer these three questions:

Are you meeting your obligations?

As soon as your debt becomes too large to comfortably manage, it’s no longer healthy. Your ability to make your monthly minimum payment doesn't mean you shouldn't worry about that debt, but it does mean that your credit card debts (at least for the time being) fit into your overall budget.

Is the debt in service to your goals?

Businesses and entrepreneurs carry debt because you often have to spend money to make money. Mortgage debt and student loan debt are usually necessary if you want to own a house or get a college degree. Credit card debt – while far from ideal – can be healthy, as long as it’s a part of your plan.

At the same time, putting an expensive car repair bill on your credit card may not be part of your plan, but it is in service to your most pressing needs and goals. It gets you back on the road and potentially back to work. 

Think about where that debt came from and what purpose it's serving you. If the purpose isn't worth the cost, that may be a sign that things need to change and your debt needs to become a priority. 

Are you making progress repaying that debt?

Because most credit card debts cost you money every month in interest charges, it's always in your best interest to get those balances down as quickly as you can manage. Do you have a plan? Are you making progress? If your debts are staying stagnant or moving in the wrong direction, you may need to change your tactics and seek out new ways to tackle your debt. 

If you can’t quite keep up because of your debt, or if the debt isn’t “helpful” in some way, then it’s really not a healthy or normal debt. Your best next step? Let an expert review your situation and show you the best solution to your unique situation.

MMI offers free financial counseling, online and over the phone, designed to help you understand your options and pick the right one for you. Get started today and let us show you how to get out of debt and save money in the process.

Tagged in Debt strategies

Jesse Campbell photo.

Jesse Campbell is the Content Manager at MMI, with over ten years of experience creating valuable educational materials that help families through everyday and extraordinary financial challenges.

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