Credit Card Debt in the U.S. Hits $930 Billion | What Americans Can Do Now
U.S. credit card debt reached a record $930 billion in the final quarter of 2019, according to data released by the Federal Reserve Bank of New York on Feb. 11.
Balances increased by $46 billion compared to the previous quarter and were up $57 billion from the same period in 2018. The data highlights the growing debt burden across the country and points to rising risks for younger consumers.
Key Facts on Credit Card Debt and Delinquencies
- U.S. credit card debt reached an all-time high of $930 billion
- Debt exceeded the previous peak of $870 billion during the 2008 financial crisis
- Credit card delinquency rates rose to 5.32%
- Americans ages 18 to 29 have the highest delinquency rate
Credit card delinquency rates, defined as payments that are 90 days or more past due, climbed to 5.32%, up from 5.16% in the prior quarter.
“The data also show that transitions into delinquency among credit card borrowers have steadily risen since 2016, notably among younger borrowers,” said Wilbert Van Der Klaauw, senior vice president at the New York Fed.
Delinquency Rates by Age Group
- 18 to 29: 9.36%
- 30 to 39: 6.05%
- 40 to 49: 5.64%
- 50 to 59: 4.79%
- 60 to 69: 4.34%
- 70 and older: 4.26%
The youngest group of Americans, ages 18 to 29, recorded a delinquency rate of 9.36%, which is 76% higher than the national average. Consumers age 50 and older reported rates below 5%, often reflecting greater accumulated wealth.
For Americans struggling with credit card balances, reducing debt sooner rather than later can help limit interest costs.
Using a Balance Transfer Credit Card
Opening a new credit card may not seem like a solution, but balance transfer credit cards allow borrowers to move debt from high-interest cards to a card offering a 0% introductory APR for up to 21 months.
By transferring balances, payments can go toward the principal instead of interest, potentially saving a significant amount in fees.
The Citi Simplicity® Card offers a 0% intro APR for 21 months on balance transfers, followed by a variable APR of 17.49% to 28.24%. A balance transfer fee of 3% applies for transfers made within the first four months, increasing to 5% afterward.
The Wells Fargo Reflect® Card also provides a 0% intro APR for 21 months on qualifying purchases and balance transfers, with a variable APR of 17.49%, 23.99% or 28.24% after the intro period. Balance transfers must be completed within 120 days, with a fee of 5% and a $5 minimum.
Balance transfer cards may limit how much debt can be transferred and typically require good or excellent credit. Transfers between cards from the same bank are not allowed, so reviewing the terms is important.
Before transferring a balance, borrowers should have a repayment plan in place to ensure the debt is paid off before the introductory period ends.
Consolidating Debt With a Personal Loan
For those with larger balances, a personal loan may cover more debt than a balance transfer card. Personal loans provide a fixed amount with a set repayment period and interest rate.
Although personal loans usually do not offer 0% interest, their rates are often lower than carrying a balance on credit cards.
Borrowing From Family or Friends
Consumers with credit scores below 580 may struggle to qualify for balance transfer cards or personal loans. In some cases, borrowing from a family member or close friend may be an option.
This approach may work if the debt amount is manageable, but borrowers should establish a clear repayment plan to avoid damaging relationships.
Mortgage and Refinance Interest Rates
