WalletHub analyzed Federal Reserve data released today and found that credit card debt hit $1.26 trillion in February 2024, which is 6% higher than last year after adjusting for inflation. With the average credit card APR up 8.17% versus last year, WalletHub now projects that credit card debt will increase by $120+ billion by the end of 2024. You can find other takeaways from WalletHub’s latest Credit Card Debt Survey below.
- Debt Crisis: 78% of Americans think credit card debt is out of control.
- Rising Debt Levels: 41% of Americans say they have more credit card debt now than they did 12 months ago.
- Year-End Projections: More than 1 in 5 people say they will have more credit card debt by the end of 2024.
- Debt-Induced Stress: Nearly 1 in 4 Americans are very stressed about their credit card debt.
- Economic Threat: Nearly 3 in 4 people think the current amount of credit card debt held by U.S. households is a threat to the economy.
- Forced Into Alternative Payments: Nearly 1 in 3 people have tried “buy now, pay later” loans because they can’t add more credit card debt.
- Desperate Measures: Nearly 1 in 5 Americans would go to jail for a year to get their credit card debt paid off.
“More than 40% of people say they have more credit card debt now than they did 12 months ago, and more than 20% of people expect to have even more debt by the end of 2024. It’s an unfortunate situation to be in, to be sure, though it’s unfair to cast blame on people struggling with credit card debt because so many Americans have the same issue right now. High interest rates and inflation are easy scapegoats, too, but for the sake of the economy, we need to be looking for solutions instead. Nearly 3 in 4 people think the amount of credit card debt we owe is a threat to the economy.”
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“Nearly 8 in 10 Americans think credit card debt is ‘out of control,’ and around 1 in 4 people are very stressed about how much they owe. A significant number of people even say they’d submit to a year in jail just to get their credit card debt paid off. You don’t need to spend time behind bars, fortunately, but you do need the restraint of a well-thought-out budget. A low interest balance transfer credit card or debt consolidation loan could certainly come in handy, too.”
- John Kiernan, WalletHub Editor
Q&A With WalletHub Editor John Kiernan
Will credit card debt continue to rise in 2024?
“More than 1 in 5 people believe they will have more credit card debt at the end of 2024 than they have now, according to WalletHub's latest consumer survey. Our analysts also foresee a big build-up in debt this year, projecting that consumers will add at least $120 billion in credit card debt and possibly set an all-time record, even after adjusting for inflation.”
Are people stressed out by credit card debt?
“Nearly 1 in 4 Americans are very stressed about their credit card debt, according to a new WalletHub survey. Sleepless nights spent tossing and turning have even led some people to contemplate unusual bargains in search of debt forgiveness. For instance, nearly 1 in 5 Americans say they would go to jail for a year in order to get their credit card debt paid off, if that were a possibility. Even if you don’t have any credit card debt personally, the total amount other Americans owe is quite concerning. For example, nearly three-quarters of us think the amount of credit card debt currently held by U.S. households is a threat to the economy, and even more people agree that credit card debt is out of control.”
How is credit card debt affecting consumers’ payment habits?
“Record highs in credit card debt and credit card interest rates have sent balances soaring higher and pushed consumers to explore alternative payment options in the face of limited amounts of available credit and limited prospects for new credit lines. Buy now, pay later offers have been a notable beneficiary, with nearly 1 in 3 people saying they’ve tried buy now, pay later loans because they can’t add more credit card debt.”
4 Tips for Minimizing the Effects of High Interest Rates
- Allocate a specific credit card solely for everyday expenses and ensure the monthly bill is paid in full. By paying the entire statement balance before the due date each month, you can prevent the accrual of interest on everyday purchases. Conversely, using the same card for both daily purchases and long-term debt will result in interest applying to the entire balance.
- Opt for a balance transfer card to decrease the financial burden of existing debt. The most favorable balance transfer credit cards provide interest-free periods of up to 21 months, and attractive offers are accessible to individuals with fair credit or better. A prolonged 0% introductory period can yield significant savings on interest, aiding in faster debt repayment.
- Utilize a 0% credit card for substantial expenses. When faced with a major cost that requires several months to pay off, employing a 0% credit card can shield you from interest charges. This avoids the need to commingle these expenses with everyday purchases.
- Prioritize budgeting, saving, and building credit. Trimming non-essential expenditures reduces the debt subject to high interest rates. Enhanced savings and an improved credit score position you favorably to qualify for 0% cards and can reduce the risk of you falling back into debt once you pay off what you currently owe.
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