American Households Carry $420 Billion in Revolving Credit Card Debt, According to Annual NerdWallet Study

SAN FRANCISCO, Dec. 10, 2018 /PRNewswire/ -- According to NerdWallet's 2018 American Household Credit Card Debt Study, U.S. consumers now have a collective $13.51 trillion in total household debt. Households that hold credit card debt carry an average revolving balance of $6,929, NerdWallet found.

Credit card debt continues to be one of the most expensive types of debt, and carrying that average balance of $6,929 could cost $1,141 per year in interest alone. The amount Americans pay in interest may increase if the Federal Reserve increases the federal funds rate, which is likely to take place this month.

"With interest rates rising, many consumers are facing rapidly growing credit card balances in addition to other costs outpacing income growth, such as medical expenses and ballooning student loan debt," says Kimberly Palmer, NerdWallet's credit cards expert. "It's more important than ever to try to pay off variable, high-interest debt, such as credit card debt, by paying off more than the minimum payment each month, but many consumers struggle to do so due to other demands on their income."


                   Type of debt Total owed by an average U.S.
                                 household with this debt      Total owed in the U.S.

    ---

        Any type of
         debt*                                       $135,768 
            $13.51 trillion

    ---

        Credit cards
         (revolving)**                                 $6,929 
            $420.22 billion

    ---

        Mortgages                                    $184,417  
            $9.14 trillion

    ---

        Auto loans                                    $28,033  
            $1.27 trillion

    ---

        Student
         loans                                        $47,671  
            $1.44 trillion

    ---

                            * 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
                             that are carried from month to
                             month rather than all credit
                             card balances. Total U.S.
                             credit card outstanding debt
                             stands at $944 billion, which
                             includes revolving and
                             transacting balances.

The 'why' behind debt in the U.S.
NerdWallet's 2018 American Household Credit Card Debt Study analyzes data from multiple sources, including Federal Reserve Bank of New York, the Federal Reserve Bank of St. Louis, the U.S. Census Bureau and the Survey of Consumer Finances. Key findings include:

    --  Credit card interest costs continue to rise. U.S. households with
        revolving credit card debt pay an average of $1,141 in interest
        annually. Assuming the average interest rate on credit card accounts
        assessed interest will increase in step with Federal Reserve rates,
        these interest charges could grow to $1,158 the next time the Fed
        increases rates a quarter of a percentage point, which could happen Dec.
        19, 2018.
    --  Student loan forbearance is adding massive amounts of student debt. In
        the third quarter of 2018, 2.6 million student loan recipients had
        federally managed student loans in forbearance, with an average balance
        of $43,538. If all student loan recipients with federally managed loans
        in forbearance kept their loans in forbearance for 12 months without
        making interest payments, they would add a collective $5.72 billion to
        their loan balances.
    --  Incomes are growing, but some costs are growing faster. Since 2008, U.S.
        median income has increased 22%, while overall cost of living has
        increased 17%. But over the same period of time, medical costs and food
        away from home have increased 33% and 27%, respectively. These swiftly
        rising expenses could make it more challenging for many Americans to
        trim spending.
    --  Total household debt continues to grow over pre-recession levels. Total
        household debt, now $13.51 trillion, has continued to grow well past the
        $12.37 trillion owed at the start of the Great Recession in December
        2007.

Debt resources

    --  NerdWallet's 2018 American Household Credit Card Debt Study
    --  NerdWallet's Debt Guide
    --  NerdWallet Free Credit Score

About NerdWallet
NerdWallet is on a mission to provide clarity for all of life's financial decisions. As a personal finance website and app, NerdWallet provides consumers with personalized, unbiased and actionable insights so they can make smart money moves. From finding the best credit card to buying a house to investing their next dollar, and more, NerdWallet is there to help consumers make financial decisions with confidence. Consumers have free access to our expert content and comparison shopping marketplaces, plus a data-driven membership experience, which helps them stay on top of their finances, and save them time and money, giving them the freedom to do more. For more information, visit NerdWallet.com

Contact
Thomas McLean
tmclean@nerdwallet.com
559-801-8733

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SOURCE NerdWallet