Inflation is hitting many Americans hard — and they're increasingly turning to credit cards to deal with it. The average credit card debt per household was $9,990 in the fourth quarter of 2022, up nearly 10% from 2021, according to a new study by WalletHub. That's just $2,015 short of the site's projected breaking point for household finances.
Overall credit card debt totaled more than $930 billion, according to the latest numbers from credit reporting agency TransUnion. The age group leaning most on credit cards is Gen Z, with balances up 64% year-over-year in the fourth quarter of 2022.
Residents of big cities with high costs of living aren't the ones with the most debt, according to the WalletHub report. The top five places with the highest credit card balances:
- Lewiston, Maine
- Casper, Wyoming
- Manchester, New Hampshire
- Rapid City, South Dakota
- Oklahoma City
The New York Federal Reserve Bank recently put Americans' credit card debt at an even higher $986 billion in the fourth quarter of 2022, based on data from credit reporting agency Equifax. The New York fed's report shows that balances soared by more than $61 billion — the biggest quarterly increase ever. This all-time high dwarfs the $927 billion that previously held the top spot pre-pandemic.
If you are drowning in credit card debt, there are ways to deal with it.
- Change credit cards. There are balance transfer offers with 0% introductory rates, and moving your debt could temporarily relieve you of the onerous interest adding to your bill. Depending on the card, this strategy could give you 18 months or more to pay off your debt. Just be prepared to pay whatever interest rate kicks in if you don't, or transfer your balance again when the free period is over — and be aware that repeatedly opening new cards could hurt your credit score.
- Consider a lower-interest personal loan. If you can consolidate your credit card debts into a loan, which usually has an interest rate around 10%, it's likely you will pay less than what you're paying a credit card company.
- Call your credit card company. If you can get a human on the line, it might be worth explaining your situation and asking for a reduction in debt or interest. These companies want to get paid, and you will likely be good for something more than they would get from selling your debt or writing it off.
- Seek out other income streams. Whether it's selling items you aren't using on eBay or becoming an Uber driver, making more money on the side, even for a limited time, can help pay your bills.
- Consider bankruptcy. If you're truly saddled with debt (especially if it's health-care-related), bankruptcy will alleviate some pain (although it isn't a get-out-of-debt-free card). Talk to a bankruptcy lawyer or financial counselor first.