How Many Americans Are in Debt? Survey Breaks Down Average American Credit Card Debt & Other Financial Concerns
Let’s Learn About: The Average Credit Card Debt in America
The number of adults in America that find it difficult to minimize debt or who have debt in collections has increased over time.
Making a late payment or missing payments will likely have a negative impact on your credit score.
If you’re facing seemingly insurmountable debt, speak with your creditors about setting up a payment plan to rebuild your credit.
When it comes to personal finance, Americans are most concerned with retiring without having enough money set aside, and also having insufficient “rainy day” savings, according to a recent survey by the National Foundation for Credit Counseling® (NFCC).
Just prior to the COVID-19 outbreak in the United States, the NFCC® conducted its 2020 Financial Literacy Survey, sponsored by Discover Financial Services, and the results offer a snapshot of the state of financial health in the U.S.
The 2020 Financial Literacy Survey was conducted online within the United States by Harris Poll on behalf of the NFCC® and Discover Financial Services between March 9th and March 13th, 2020 among 2,004 U.S. adults ages 18+. See the 2020 Financial Literacy Survey and the associated survey data linked for details.
In addition to those larger, long-term financial goals, some more immediate, everyday personal finance issues continue to be top of mind for Americans. For example, nearly 7 in 10 (69%) of respondents find it difficult to minimize their debt, primarily due to unexpected financial emergencies or reduction of income.
More than 25% say that they do not pay their bills on time, the highest percentage since 2012. But almost 70% say they pay all their bills on time and have no debts in collection.
Average American debt repayment struggles
And when it comes to credit cards, 62% of people have carried credit card debt in last 12 months, up 2% over 2019.
Percentage of Americans in credit card debt
Americans seeking financial help
Finally, more than 80% of U.S. adults agree that they would reach out for help, most commonly turning to friends and family first (23%).
To that end, consider these tips for managing personal financial issues, like late payments, during challenging times:
Credit card debt by age
According to the NFCC® survey, of the 62% of U.S. adults who have had credit card debt in the past 12 months, 46% have tried to find a lower interest rate. Interestingly, younger adults age 18 to 34 are around twice as likely as their older counterparts to have tried to negotiate a lower interest rate. Only 1% of adults 55-64 and 65+ have attempted to negotiate a lower rate.
Average household debt
The NFCC® survey shows that while over 2 in 3 U.S. adults (69%) pay all their bills on time and have no debt in collections, the number of adults with debt in collections has increased over the last four years. In comparison, 72% had debt in collections in 2019, 72% in 2018, 75% in 2017 and 74% in 2016.
Tips for managing credit card debt
Late payments and credit score
Simply put: late payments can affect your credit score. Sometimes, just being a few days late may damage your payment record, and being 30 days late will usually be reported to all three credit bureaus, impacting your credit score.
Avoid missing payments
For creditors, a single late payment may identify you as more of a credit risk than before. But there are some tools that may help you avoid missing a payment. Set up automatic payments from your checking account to be sure you make your credit card payments on time.
Actions to take if you miss a payment
It should come as no surprise that the best solution is to get your account current as soon as possible, which means paying the past-due amount. If that’s not possible all at once, talk to your creditor and establish a payment plan over a few months.
If you miss a credit card payment, there are additional penalties to consider:
- Late Fees: If you missed a payment, you may see a late fee added to your credit card balance.
- Penalty APR: Credit card issuers may adjust your account to a higher APR if you miss a payment. If your credit card company does increase your APR when you’ve missed a payment, it means that interest will accumulate on the revolving balance faster than before. Be sure to check your credit card’s terms and conditions and make sure you understand the details.
Disruptive situations like natural disasters, sudden unemployment and unexpected medical bills can have a major impact on personal finances and overall financial wellness. But utilizing some basic best practices may help you manage the situation and get through a tough time.
About the Survey: The 2020 Financial Literacy Survey was conducted online within the United States by Harris Poll on behalf of the National Foundation for Credit Counseling and Discover Financial Services between March 9th and March 13th, 2020 among 2,004 U.S. adults ages 18+. Figures for age, sex, race/ethnicity, education, region and household income were weighted where necessary to bring them into line with their actual proportions in the population. Propensity score weighting was used to adjust for respondents’ propensity to be online. Prior to 2013, this survey was conducted by telephone.