2023 American Household Credit Card Debt Study

2023 was a rough year financially for many. Although the U.S. inflation rate is moving back toward historical norms, we’re still feeling the effects of price hikes from 2022. Add in interest rates that have risen sharply, the resumption of federal student loan payments, and incomes not keeping pace with the cost of living, and it’s no surprise that debt balances are up across the board.

NerdWallet’s annual look at household debt finds that credit card debt is up nearly 16% compared with last year, for a total of more than $1.2 trillion, as of September 2023. [1] Mortgages, auto loans, student loans and overall debt loads also increased over the past year.

Here’s a breakdown of what U.S. households owed in total and the average amount per household with each type of debt, as of September 2023 [2]:

Our annual report analyzes government data from sources such as the U.S. Bureau of Labor Statistics and the Federal Reserve Bank of New York to see how household debt has changed over the past year.

NerdWallet also commissioned an online survey in November 2023 of more than 2,000 U.S. adults, among whom 796 currently have revolving credit card debt, or balances carried from month to month. The survey, conducted by The Harris Poll, asked Americans with revolving credit card debt what emotions their debt brings up for them and what roadblocks they see to paying off their credit card debt in the next 12 months.

• Income hasn’t grown as fast as expenses in recent years. While income growth has exceeded growth in the cost of living over the past decade, the inverse is true when you look only at the past four years. Costs are up 20% since 2019, while median income is up 12%. [3]

• Indebted Americans want to pay off their balances, but the higher cost of living poses challenges. According to the survey, most Americans who currently have revolving credit card debt (89%) are trying to pay it off over the next year, but 50% say the rising cost of goods could affect their ability to do so.

• Credit card debt causes stress for many who carry it. The survey shows that close to half of Americans with revolving credit card debt (48%) say they are stressed about it. It’s the No. 1 stressor for 27% of those with revolving balances.

• Increasing interest rates are making debt payoff harder and much more expensive. More than 2 in 5 Americans with revolving credit card debt (43%) say rising interest rates are a roadblock to paying it off in the next 12 months, the survey found. Based on average interest rates, each $1,000 in credit card debt a consumer carries costs an additional $56 a year in interest charges now compared with two years ago, according to NerdWallet’s analysis. [4]

• Many who are indebted think they’ll be that way forever. The survey found that around one-third of Americans with revolving credit card debt (34%) say they’ll probably always have some revolving balances. 

“It’s hard not to feel stuck if you have credit card debt. Interest rates are high, everything you buy costs more and incomes just aren’t keeping up,” says Sara Rathner, a credit cards expert at NerdWallet. “Credit card debt has long been viewed as the result of frivolous spending, but it’s really just because of how difficult it can be to keep your head above water.”

Every year, we look at how median income growth has or hasn’t kept up with the cost of living over the preceding decade. Since 2013, median income has increased by 44% while the overall cost of living has increased by around 32%. [5] But narrow that time frame to the past four years — from just before the pandemic to now — and the financial pinch that many Americans are experiencing becomes clear.

Since 2019, costs are up nearly 20%, while median income has grown 12% in the same time frame, according to data from the Bureau of Labor Statistics and the U.S. Census Bureau. [3] Specifically, food, housing and transportation have all increased significantly more than median income — 25%, 21% and 30%, respectively, over the past four years. [6]

This is reflected in our survey findings: Nearly half of Americans with revolving credit card debt (48%) say spending on necessities contributed to their balances. Close to a third of those with revolving credit card debt (31%) say they need to use a credit card to make ends meet, while 33% say they believe credit cards are necessary to make it in America if you aren’t rich.

An increasing cost of living has not only added to many Americans’ debt loads, but also made it harder for them to pay that debt off. According to our survey, the vast majority of Americans who currently have revolving credit card debt (89%) say they are trying to pay it off over the next 12 months. But most (87%) see roadblocks that could affect their ability to do so. The biggest barrier? Half of those with revolving credit card debt (50%) point to the rising cost of goods.

Around 1 in 7 Americans with revolving credit card debt (14%) say having to make federal student loan payments is a roadblock to paying off their card balances over the next year. Federal student loan bills resumed in October after a three-year hiatus. For some, this means making loan payments of hundreds of dollars or more per month, while also trying to pay down credit card debt and keep up with rising costs. It’s no wonder indebted Americans are stressed out.

Money can be emotional, and credit card debt often inspires negative feelings. According to our survey, nearly half of Americans who currently have revolving credit card debt (48%) say it makes them feel stressed. In fact, 27% of those with credit card debt say it’s their No. 1 stressor.

Some Americans with revolving credit card debt say they feel calm (18%), indifferent (15%) or content (13%) about it, but they’re in the minority. Aside from stress, feeling worried (36%) or defeated (22%) top the list of emotions. And rising interest rates that make credit card debt more expensive can’t be helping.

More than 2 in 5 Americans with revolving credit card debt (43%) say rising interest rates are a roadblock to paying it off. The Fed has been increasing interest rates steadily over the past two years to rein in inflation. The average rate on credit card accounts that were assessed interest was 22.77% as of August 2023, according to the Federal Reserve Bank of St. Louis. That’s the highest average since the St. Louis Fed began reporting these rates in 1994.

Just two years earlier, in August 2021, the average credit card interest rate was 17.13%. Assuming a steady balance for simplicity, $10,000 in credit card debt would cost you $564 a year more in interest today than it would have two years ago. [4]

With debt costing significantly more now than it was a year or two ago, it’s that much harder to pay off. But there are steps you can take to knock out your debt faster or eliminate it.

Make a debt payoff plan. According to the survey, around a third of Americans with revolving credit card debt (34%) say they’ll probably always have some revolving balances. In other words, they think they’ll be in credit card debt forever. But this doesn’t have to be the case, even if your balance feels insurmountable right now.

Start by figuring out how much debt you have. According to the survey, 13% of Americans with revolving credit card debt aren’t sure exactly how much they owe. Sign in to your accounts to find out your total balances, minimum payments and interest rates.

Next, make a debt payoff plan and determine how much money you can put toward your balances each month. According to the survey, 27% of those with revolving credit card debt generally make only the minimum payments. But with interest rates as high as they are now, you could be stuck in debt for decades with this approach.

Let’s say you have a credit card balance of $10,000, the average interest rate of 22.77%, and a minimum payment of 3% of the balance or $35, whichever is higher on a given month. It would take more than 20 years and nearly $16,000 in interest to pay it off. But each dollar you pay above the minimum reduces the interest you’re charged and the time needed to pay off your debt.

“Checking in on your debt — how much you owe, what your interest rates are — can be a powerful exercise. You may have more money in your budget than you realized to put toward those debts and pay them off more quickly,” Rathner says. “Finding a debt payoff plan that keeps you motivated is great, but anything you do to get started is going to make a difference.”

Don’t focus on credit card rewards if you have debt. According to the survey, 2 in 5 Americans with revolving credit card debt (40%) use credit cards to earn rewards, and 18% say credit card debt is worth it for the rewards they earn on their spending. And while it’s true that a sign-up bonus can make up for interest costs in the short term, ongoing rewards simply can’t keep up with interest charges for long.

Let’s say you get a new credit card that earns 2% cash back and charges the average interest rate. If you put $1,000 a month on the card, but pay off $500 a month, the interest you pay will outstrip the rewards you earn within six months. If you’re making minimum payments of $40, it’s less than four months. And that’s just when you’re starting from zero on a new card. If you’re already carrying a significant balance on a card, the rewards you earn from new spending will likely be eaten up by interest immediately.

“Chasing after points when you have credit card debt is like running on a treadmill. You’re just not going to get ahead,” Rathner says. “Put your energy into paying down your credit card debt. The rewards can wait.”

Take steps to lower interest. As noted, credit card interest rates are high, and this can make it harder to pay down debt. But there may be options to lower your rate to accelerate debt payoff. According to the survey, 14% of those with revolving credit card debt have successfully negotiated a lower interest rate on at least one credit card. This may or may not be possible for you, but you won’t know until you call your credit card issuer and ask.

The survey also found that 22% of Americans with revolving credit card debt have used a 0% balance transfer card to save money on interest. If you have good credit and can’t reasonably pay off your debt in the next few months, a balance transfer credit card could help. There’s usually a fee — generally 3% to 5% of the amount transferred — but if it could get you 0% interest for a year or more, you’ll save by paying the fee and skipping interest charges. But make a plan to pay off the card before the introductory rate expires, if at all possible.

Consider alternatives if you can’t reasonably make progress. For some, even making the minimum payments on their debt isn’t feasible. The survey found that of Americans with revolving credit card debt, 13% can’t afford the minimum payments. If this is you, or if you can afford the minimums but not much more, it may be worth considering debt relief. That might take the form of debt management counseling, or maybe bankruptcy is the best option. Either way, it can provide relief from overwhelming balances and allow you to start over.

“If you’re trapped in a cycle of just making minimum payments, this is a good time to reevaluate your approach,” Rathner says. “You may be able to increase your payments or lower your interest rate. Or, if not, reputable organizations like nonprofit credit counseling agencies can help.”

This survey was conducted online within the U.S. by The Harris Poll on behalf of NerdWallet from Nov. 7-9, 2023, among 2,042 U.S. adults ages 18 and older. The sampling precision of Harris online polls is measured by using a Bayesian credible interval. For this study, the sample data is accurate to within +/– 2.7 percentage points using a 95% confidence level. For complete survey methodology, including weighting variables and subgroup sample sizes, contact [email protected].

NerdWallet’s analysis includes data from the following sources: