2022 American Household Credit Card Debt Study
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2022 American Household Credit Card Debt Study
The annual NerdWallet study shows the credit card debt growing in tandem in tandem with the rising cost of living. And many Americans are concerned about financial issues in the coming year.
by Erin El Issa Senior Writer | Data analysis, personal finance, credit card Erin El Issa writes data-driven research on personal financial matters, credit cards, investments, travel, as well as student loans. She loves numbers and aims to make data sets understandable to help consumers improve their financial lives. Before becoming the Nerd at the beginning of 2014, Erin was a tax accountant and freelance personal finance writer. Erin’s work has been mentioned in The New York Times, CNBC, on the “Today” show, Forbes and elsewhere. In her free time, Erin reads voraciously and tries in vain to keep up with her two kids. She is based in Ypsilanti, Michigan.
Jan 10, 2023
Edited by Paul Soucy Lead Assigning Editor Credit scoring, credit cards, personal finance Paul Soucy leads the credit cards content team at NerdWallet. He was an editor with the Des Moines Register, USA Today and Meredith/Better Homes and Gardens for more than 20 years. He then built his own successful freelance writing and editing practice. Editorial duties included the USA Today Weekly International Edition and received the highest distinction by ACES: The Society for Editing. He holds a bachelor’s degree in journalism as well as a Master of Business Administration.
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This year has been a costly one: Living expenses has risen faster than incomes, causing many Americans to take on more debt to get by. The interest rates have increased in response to the rising cost of living are making debt expensive.
NerdWallet’s annual review of household debt shows that credit card balances from month to month have increased in the last 12 months, totaling around $460 billion as of September 2022 . Mortgages, auto loans and overall debt load have also increased in the last year, while student loan debt dropped little.
Here’s a breakdown of the amount U.S. households owed in total , and the average amount per household for every type of debt as of September 2022:
Kind of debt
The amount of debt owed by the typical U.S. household with this amount of debt
Total owed in the U.S.
Percentage change for total owed between 2021 to 2022
Any type of debt*
Cards for credit (total)*
Credit cards (revolving)
* This debt can include mortgages as well as home equity lines of credit and auto loans, credit cards, loans for students, loans and other debts of the household as per the Federal Reserve Bank of New York. *Total U.S. credit card outstanding debt includes revolving and transacting balances. ***Revolving debt was calculated with the help of the average over the last five years of the percentage of credit card debt deemed as revolving (carried monthly) instead of transacting (paid in full every month). We’ve had these figures from Experian. The credit bureau has declined to release the revolving vs. transactions data for 2022.
A note on the data for this year
The increase of nearly 30% in revolving credit card debt (that is, balances of credit cards that are that are carried from month to month — can be attributed to two reasons: a significant increase in the total debt of credit cards (revolving or nonrevolving) and a greater amount of the revolving debt. The total credit card debt increased by 15 percent. With the cost of living exceeding income growth, it stands to reason that a greater share of the increase was in the form of revolving debt. This is just an estimate; we calculated it with the average percentage of revolving debt from the last five years. This is more over the historically lower revolving credit percentage of 2021 but is similar to percentages in the years before the COVID-19 epidemic.
Our annual study examines data from the government — from such sources including The U.S. Bureau of Labor Statistics and the Federal Reserve Bank of New York to determine how the debt of households has changed over the past year. NerdWallet has also recently conducted an online survey of more than 22,000 U.S. adults, conducted by The Harris Poll, to learn more about the way Americans are feeling about their debt and what they believe future rate hikes will impact their finances. We also inquired about Americans’ usage of “buy now buy later” services, how their income has (or not) kept up with inflation, as well as their financial worries for the coming year.
The price of food is increasing faster than incomes. In the past year, the median household income has only increased by 4 percent, while the total cost of living increased by 8 . The survey found that nearly 50% of working Americans (45 percent) say their pay hasn’t grown enough over the last twelve months to keep pace with the rate of inflation.
Buy now, pay later services may mean deeper debt for millions. One in five Americans (18%) claim to have utilized a BNPL service within the last 12 months.
The American public is worried about their financial stability over the coming year. Nearly 7 out 10 Americans (69%) have financial concerns about the next 12 months. The top. concern is having to go into debt/more borrowing to meet the needs (31 percent), followed by having to pay more the interest they pay on their debt (27 percent).
The average amount of credit card interest paid by households is rising because of recent Federal Reserve rate hikes and increasing amounts of credit card debt that is revolving. U.S. households that carry credit card debt will be paying an average of $1,380 in annual interest . That’s assuming that interest rates don’t go higher.
“Credit card debt is often believed as the outcome of impulsive spending, but for a lot of Americans it’s not an accurate statement,” says Sara Rathner, a NerdWallet credit cards expert. “Consumers suffer the pressure of rising prices and high interest rates, and paychecks aren’t enough to keep up. Many are forced to make difficult decisions, such as taking out loans to fund necessities.”
The cost of living is outpacing earnings growth by a significant amount over the last year
Every year, we look at the growth in cost of living in comparison to the income of households in the previous decade to determine whether income is keeping pace with the cost of living. If we use the 10-year time period, we discovered that income is growing the pace: Median household income has grown by 44% over the past year however, overall expenses have been up by 28% in the same span . But the story changes radically when you look at quick-term growth due to the COVID-19 pandemic and the extraordinary high rate of inflation.
Looking at growth over the last three yearsfrom pre-pandemic up to todaythe median income has increased by 7%, but overall expenses have increased by nearly 16percent . This includes a 27% rise in the cost of transportation as well as a 20% rise for food and beverages expenses, and a 14% increase in housing expenses. This could be a reason why, according to our survey, 45% of Americans think their overall financial health is less good when compared to prior to when the pandemic COVID-19 was first discovered.
In the survey, almost half of employed Americans (45 percent) believe that their wages haven’t been increasing enough in the last 12 months to keep pace with inflation. In the consumer price index and income growth data backs this up. Over the past year the prices have risen in the range of 8.2 percent annual inflation in September 2022. This includes a 13% rise in transportation costs as well as 11% increase in the cost of food and beverages and 8% in the cost of housing. Meanwhile, the median household income has increased just 4% over this period .
Consumers are doing all they can to reduce the impact of higher prices. According to the study, nearly 4 in five Americans (79%) say they have taken action in response to inflation over the past six months: 42 percent of Americans have said they’ve driven less, and 39% say they’ve bought more brands from the stores and non-processed essentials. Nearly one in five Americans (19 percent) claim they’ve taken on more debt in response to inflation over the last six months.
” Examining your current spending to see where you can cut down and putting any extra money towards savings or debt repayment can be a big help. ” Sara Rathner , NerdWallet credit card expert
Debt is making Americans feel overwhelmed, anxious and stressed
Over the past year, almost 3 in 10 Americans (28%) claim that their debt has increased. 14% of Americans have been able to pay for medical expenses during this time. It’s likely that this debt is taking a toll.
According to the study, 41% of Americans who are currently in debt feel anxious about it, while 35% are overwhelmed. This feeling of feeling overwhelmed is most prevalent in Americans who have annual household incomes under $75,000 who currently have debt 44% of this group is feeling this way, as against 27% of debt-laden Americans with an annual household income of $75,000 or more.
BNPL could be hiding additional debt
Our annual analysis of household debt analyzes traditional types of debt like credit cards, mortgages and student loans. Robust data about such debts is collected and reported by government entities such as The Federal Reserve Bank of New York. But the debt problem may go deeper because of the increasing number of short-term loans made by , like Affirm or Klarna. BNPL services let you buy something now and then make payments in installments — often 25% at the time of purchase and 25% every two weeks until the loan is paid off. More long-term BNPL options typically have a fee for interest, similar to an installment loan.
According to our survey, nearly 1 in 5 Americans (18 percent) have utilized the BNPL service within the last twelve months. This situation is more prevalent among younger Americans as 25% from Gen Zers (ages between 18 and 25) and 30 percent of young adults (ages 26-41) have utilized these services within the last year, while 16% among Gen Xers (ages 42-57) and 7 percent among baby boomers (ages 58-76).
Certain Americans rely on BNPL solutions to cover everyday necessities such as things that get exhausted before they’re paid for. According to a September 2022 report by the , or CFPB usage of the CFPB for everyday or necessity purchases like gas, groceries and utilities — increased by 434% from 2020 to 2021 and increased by 1,207% between 2019 and 2020.
BNPL services are often interest-free, but they may charge late fees to customers who do not pay. The CFPB report found that 10.5 percent of BNPL borrowers were assessed at the very least one late fee by 2021. And while late fees tend to be small — around $7 on the annual average loan amount of 135- the report highlights the possible negatives to the services, which could be financially unhealthy, like overextension as well as the taking of more loans than you’re able to handle.
For those who only use BNPL once in a while the possibility of overextension shouldn’t be an issue. However, for those who stack loans — taking on multiple loans in a short amount of time, and are regular BNPL users this payment obligation could affect the ability of paying for other expenses in time due to the volume of BNPL payments they have to make. This could lead to penalties for late payments, interest charges and even damage to credit scores.
Many Americans bringing financial anxiety to the beginning of the year
The last year has been expensive, and many people aren’t optimistic things will improve in the coming year. Nearly 7 in 10 Americans (69 percent) have financial concerns about the coming year The top concern being the need to enter debt, or deeper in debt to pay for necessities (31 percent).
Over 25% of Americans (27 27.7%) are concerned about the possibility of paying higher interest on their debt over the next 12 months; this comes after a series of rate hikes from the Federal Reserve and the possibility of further rises in 2023.
Interest rates for credit cards are up and may go higher.
This action by the Federal Reserve has raised the average interest rate for accounts that pay interest to 18.43 percent in August 2022, according the Federal Reserve Bank of St. Louis. The highest amount since St. Louis Fed began monitoring this data in 1994. For American households that carry the average amount of credit card debt that is revolving, that would produce an annual interest charge of $1,380. In the past year, the average interest charges were $1,029 annually due to the lower amount of credit card debt revolving, and lower interest rates.
In 2022, Americans saw seven rate increases from the Fed and more may be on the way in 2023. According to the survey, more than 3 in five Americans (61%) believe that future rate hikes will impact their financial situation, either in good or bad ways. However, while 33% of Americans believe they’ll make their current credit more expensive, and 28% believe that it will make any new debt they take on more costly, one in 5 Americans (20 percent) think they’ll gain more interest on their savings.
What Americans can do?
Take steps to prepare for a recession that could be coming. In the moment, a recession hasn’t been officially declared, but certain experts believe that we’re in one or is coming soon. If you do know that the coming recession is imminent it’s difficult to predict what’s to come because the effects of a recession don’t seem to be common nor universal. Moreover, uncertainty can quickly turn to disaster. The last several years have given plenty of evidence about the necessity of planning for the unforeseeable, and there are ways to mitigate the effects to your financial health.
If you’re in a position do so, you should add funds to your savings regularly. This could mean continuing to create an emergency fund that covers 3 to 6 months of expenses, or perhaps making savings higher than that for the eventuality of longer-term income loss. To make more money to invest in savings take a look at your budget and see what you can cut. It’s not necessary to cut down on your spending forever, but in the short-term it will help you boost your savings quicker.
“If a one or two months of expenses seem too much for you to be able to set aside now, shoot at a few hundred dollars from an account for emergency funds” NerdWallet’s Rathner suggests. “It can be extremely useful when you’re faced with an unexpected cost.”
” You can’t control the economy at large but you can take small steps to feel more financially secure right now. ” Sara Rathner , NerdWallet credit cards expert
Pay now rather than later, if you can. Utilizing a buy now pay later program might be the right choice for you however, before you decide to use one, think about other options. If you have enough funds to pay off the balance, placing the charge on a credit card will get you rewards, and also safeguard your purchase in the event that you need to return the item. It’s also an excellent idea to save for non-essential items for the duration of six weeks — the standard BNPL period — and then purchase the item. You may find you no longer care to buy the item once a time has been passed.
If you decide to utilize BNPL services, set up automatic payments to avoid late charges and restrict the amount of purchases you make in the short timeframe to avoid becoming overwhelmed.
Avoid major financial decisions If possible, steer clear of major financial decisions. Due to consumer worries about rising interest rates, credit being harder to obtain, and a decrease in credits, it is possible that you may prefer to put off accepting new debts if you can. This might not be feasible for you, and that’s OK; sometimes it’s just not possible to wait for the right time, particularly when experiencing financial difficulties. However, if you are able to put back from making any major financial decisions and make major financial decisions, it’s probably a great idea to do so.
“This is the perfect moment to concentrate on basic financial matters,” Rathner says. “Checking your recent spending for areas where you can cut back and applying any additional funds to debt or savings can be a big help.”
Know how interest rates will affect you. A majority of Americans (21 percent) aren’t certain if future rates could affect their financial position, according to the survey. If you’re in the market for credit with variable interest rates, such as credit cards or an equity line of creditor you have money in savings accounts, increasing rates will probably affect you. The same goes for new credit with fixed rates like the mortgage or auto loan.
Interest rate increases can increase the cost of your debt However, they increase your savings faster. If you are in debt with a variable rate, aim to pay more or less frequent payments to repay it quicker. Hold off on applying for large loans with fixed rates as well as you canhigh rates can make large purchases, like a home or car, significantly more expensive. If you have savings accounts, you should check the interest rate. Rates were incredibly low up until recently, however nowadays, you can find annual percentage rates, or APRs, that are at least 3.
“The possibility of economic uncertainty is always frightening,” Rathner says. “You can’t manage the global economy but you can take even small steps to feel more financially secure right now.”
This poll was conducted online within The United States by The Harris Poll on behalf of NerdWallet from October. 25-27, 2022, among 2,041 U.S. adults 18 and older. The accuracy of sampling in Harris online polls is assessed using a Bayesian reliable interval. In this study, the sample data is accurate to within +/- 2.8 percentage points, using 95% confidence levels. For more information on the survey’s methodology that includes weighting variables and size of the subgroups, please contact Lauren Nash at .
NerdWallet’s analysis includes data from these sources:
September 2022, data in the Federal Reserve’s Center for Microeconomic Data.
December 2021, taken from The U.S. Census Bureau.
From to the Board of Governors of the Federal Reserve System.
September 2022, as reported by September 2022, from the U.S. Bureau of Labor Statistics.
December 2021, as reported by December 2021, from the U.S. Census Bureau.
September 2022, in the U.S. Bureau of Labor Statistics’ National Compensation Survey.
August 2022, from the Federal Reserve Bank of St. Louis.
Expand to include footnotes
1 Revolving credit card debt is analyzed differently from other types of household debt. In the case of credit card debt, Federal Reserve Bank of New York uses data from Equifax among the three largest credit reporting agencies in the U.S., as the source for its credit card debt data and includes revolving balances (debt transferred between months) as well as transacting balances (debt that will be paid off on the next statement). We’ve previously utilized information from the credit bureau Experian to calculate the percentage of balances which were revolving and transacted on credit cards issued by banks. Experian did not provide this data for 2022, so we took the average of percentages from 2017 through 2021. The information on the revolving balances of retail credit cards weren’t available, so we assumed that cardholders revolved debt on retail credit cards and bank credit cards at the same rate. Then, we multiplied the total outstanding credit card balances across the U.S. — $1.05 trillion at the time of September 2022 — by the percentage of debt that is revolving. (According to the New York Fed, the nation’s households had outstanding debt on credit cards of 925 billion as of September 2022. This number includes credit cards for banks, but not retail credit cards. To make the number more representative of the total cards, we took the $925 billion and compared that figure to 25 percent of reported “other” debt; the New York Fed says about one quarter of the so-called other debt is outstanding credit card loans.) In addition, we divided this amount by the number of households that have credit card debt that is revolving. We calculated the number of household members by multiplying number of U.S. households, projected using data that were released at the end of 2021, and then dividing it by the percentage of households holding that debt (using 2022 estimates based on 2019 data taken from the Fed’s Survey of Consumer Finances).
 To calculate household debt for each category (with the exclusion of revolving credit card debt — we took the average of each kind of debt that was reported to the Federal Reserve Bank of New York and divided this amount by the total number of houses with that type of debt. We estimated the number of household debt by multiplying total number U.S. households, projected based on data released at the end of 2021, and then dividing it by the proportion of households that have that debt, based on the data taken from the 2018 Survey of Consumer Finances.
Consumer price indexes or CPIs track changes in the price of a set of consumer goods and services. The price indexes that we examined include the cost of clothing as well as education and communications food and beverages as well as food and beverages in the home environment, meals away from home, housing, medical, other goods as well as services, recreational activities and transportation. Based on the U.S. Bureau of Labor Statistics the price index for all items grew by 274.214 and then 296.761 between September 2021 between September 2021 and September 2022. Transportation CPI was up between 237.107 to 267.043 Food and beverage CPI rose from 280.413 to 310.635 and housing CPI increased between 283.532 to 306.323 between September 2021 and September 2022. To assess the growth in the price index categories with income growth since 2012, we projected a median household income of $70,653 in 2022 by using the 2021 median reported income of $70,784 and increasing or decreasing it based on the percentage changes that occur quarterly in the Bureau of Labor Statistics’ Employment Cost Index data for civilian workers. Based on Census data, the median household income was $70,784 by 2021 and our projections predict an average household income of $73,653 by 2022.
 To determine credit card interest over the time of the year, we applied our estimate of revolving credit card debt as well as data on the average rate of interest for credit card accounts that have been assessed interest by the Federal Reserve Bank of St. Louis beginning in August 2022. With a steady balance, we multiplied the average revolving credit card debt of households that have high credit card balances by their average annual percentage rate. This is just an estimate. To make it easier the calculations don’t consider any fluctuating or daily compounding balances.
5. According to the U.S. Bureau of Labor Statistics The price index for all items grew from 231.015 to 296.761 from September of 2012 and September 2022. Based on Census data the median household earnings was $51,017 in 2012. our projections predict the median household income to be $73,653 in 2022.
6] According to the U.S. Bureau of Labor Statistics The price index for all items grew by 256.596 to 296.761 during the period between September and September 2022. Transportation CPI was up to 209.896 to 267.043 Food and drink CPI was up from 258.59 up to 310.635 while housing CPI rose by 267.555 up to 306.323 from September of 2019 to September 2022. Based on census data the median household’s income was $68,703 in the year 2019; our projections show the median household income to be $73,653 in 2022.
The author’s bio: Erin El Issa is a credit cards expert and writer on studies at NerdWallet. She has had her work highlighted by USA Today, U.S. News and MarketWatch.
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