Americans have a love-hate relationship with their credit cards. Though many people try their best to pay their cards off in full, a large percentage of American credit cardholders are carrying a balance from month — and it’s proving costly.
After over a year of record-high interest rates, the Federal Reserve cut the federal funds rate three times in the second half of 2024. But credit card borrowers are still paying a record-high average annual percentage rate (APR) of over 20 percent, according to Bankrate. In other words, today’s Americans taking on credit card debt pay much more in interest than they would have on that same debt only a few years ago. On top of that, stubborn inflation has contributed to many Americans going into debt to finance their normal levels of spending.
To keep up with the country’s changing credit card habits, Bankrate conducted several surveys with polling agencies YouGov Plc and SSRS in the last year. In each poll, Bankrate surveyed between 1,000 to 2,000+ Americans over the age of 18 on topics like credit card usage, how long they’ve maintained a balance and if they’re prioritizing paying down that balance.
The resulting data, weighted to represent all U.S. adults, shines a light on Americans’ struggles with credit card debt. As of November 2024 polling, almost half (48 percent) of credit cardholders carry debt from month to month, according to Bankrate’s latest Credit Card Debt Survey.
Read on for a snapshot of Americans’ attitudes and habits on credit card debt. Bankrate will update this with new data throughout the year.
High inflation and high interest rates have been a nasty combination for credit card balances, and while the worst is behind us, the cumulative effects are significant and will linger.
— Ted Rossman, Bankrate Senior Industry Analyst
Key takeaways
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Emergency expenses are fueling credit card debt — which can linger for years
Nearly half of credit cardholders (48 percent) carry debt from month to month, according to our Credit Card Debt Survey. That’s down from 50 percent in June 2024, but up from 39 percent in 2021:
Source: Bankrate’s Credit Card Debt Surveys
Note: Among respondents who are credit cardholders
Personal finance experts recommend paying your credit card in full every month to avoid high interest rates on your purchases. But in practice, more than half (53 percent) of U.S. adults who carry a balance on their credit cards have had the balance for at least a year. While that’s down from 60 percent in June 2024, it’s up from 50 percent in late 2021.
Unfortunately, many people carrying credit card debt have that debt due to an emergency. Nearly half (47 percent) of people who carry a balance on their credit cards say the primary cause was an emergency or unexpected expense, which includes medical bills (15 percent), car repairs (9 percent), home repairs (7 percent) and other emergency or unexpected expenses (16 percent). Others cited routine expenses:
- Day-to-day expenses, such as groceries, childcare and utilities: 28 percent
- Retail purchases, such as clothing and electronics: 11 percent
- Vacation/entertainment expenses: 9 percent
Pay off your credit card debt
Starting to pay off credit card debt aggressively isn’t easy. These payoff strategies give you a place to start.
How to pay off credit card debt
The majority (71 percent) of credit cardholders who carry balance(s) from month to month expect to pay off their credit card debt within five years, including 30 percent who expect to pay it off within a year and 41 percent who expect to pay it off between one and five years from now. On the other hand, 13 percent expect it will take more than a decade to pay off their debt, including 6 percent who expect to never get out of credit card debt.
“If you have credit card debt, take matters into your own hands to pay it down as quickly as possible,” Bankrate Senior Industry Analyst Ted Rossman says. “If you can’t pay it off right away, sign up for a balance transfer card with a generous 0 percent interest term. Some of these deals last as long as 21 months.”
A record-high percentage of Americans have more credit card debt than savings
Having an emergency fund with at least three months of expenses saved is a vital resource in case of a job loss or unexpected bill, but 36 percent of U.S. adults have more credit card debt than emergency savings, according to our Emergency Savings Report. That’s a record-high percentage — the highest (tied with 2023) since Bankrate began asking the question in 2011. Additionally, 54 percent of U.S. adults have more in their emergency fund or savings, and 10 percent have no credit card debt and no savings.
Source: Bankrate’s Emergency Savings Report, Jan. 19-21, 2024
Note: Percentages don’t total 100 due to rounding.
Compared to 2023, more Americans say they want to tackle their debt in 2024. When asked to choose whether paying down debt or building emergency savings is a higher priority for them, 25 percent of people say they’re prioritizing paying down debt, up slightly from 23 percent in 2023.
In 2024, 36 percent said they were focused on both paying down debt and increasing emergency savings at the same time:
- Focused on both at the same time: 36 percent
- Increasing emergency savings: 28 percent
- Paying down debt: 25 percent
- Neither one is a priority: 11 percent
Debt commonly negatively affects Americans’ mental health
As a large percentage of Americans continue to carry credit card debt, 47 percent of U.S. adults say money causes a negative impact on their mental health, at least occasionally, according to our Money and Mental Health Survey. In comparison, 39 percent of people cite their own health and 38 percent cite current events (such as world news, politics, climate change, etc.).
Specifically, 47 percent of U.S. adults who say money causes a negative impact on their mental health cite being in debt — like credit card debt, medical debt or student loan debt — as a reason why. People also cited other factors that may have contributed to carrying debt, such as inflation and rising prices (65 percent) and rising interest rates (28 percent):
Source: Bankrate’s Money and Mental Health Survey, March 18-20, 2024
Notes: Participants could select more than one answer; Percentages are of U.S. adults who have money concerns that impact their mental health
“When we worry about things, a lot of the time it’s because we feel out of control. Take some of that power back by putting a plan together,” Rossman says.
Many Americans would take on more debt to travel or dine out
Despite the rising percentage of people already in credit card debt, Americans say they’re willing to go into debt for the sake of experiences. Nearly 2 in 5 (38 percent) U.S. adults were willing to go into debt to travel, dine out or see live entertainment in 2024, according to our Discretionary Spending Survey. The highest percentage of people would be willing to take on debt to travel, at 27 percent, followed by dining out (14 percent) and live entertainment (13 percent):
Source: Bankrate’s Discretionary Spending Survey, March 4-6, 2024
Note: Respondents could select more than one option.
The demand for entertainment away from home comes even as inflation and high interest rates weaken consumers’ buying power today, according to Rossman.
“Some of that reflects a ‘you only live once’ mentality that intensified during the pandemic, and some of that is because many economic indicators — including GDP growth and the unemployment rate — are in favorable shape,” Rossman says. “But there’s a lot of inequality in the economy, and that’s very evident in these results.”
Many people are focusing on credit card rewards even as they carry a balance
Despite the high percentage of people who carry a balance on their credit cards, the majority of people are chasing credit card rewards. One-third (33 percent) of credit cardholders say they make every effort to maximize credit card rewards and 39 percent say they make some effort, according to our Chasing Rewards in Debt Survey.
Despite not having their cards paid off, 67 percent of people who carry a balance on their credit cards make an effort to maximize credit card rewards, at 27 percent making “every effort” and 40 percent making “some effort.” Over 1 in 3 (33 percent) credit cardholders who carry a balance make no effort to maximize credit card rewards.
Source: Bankrate’s Chasing Rewards in Debt Survey, Jan. 24-26, 2024
Note: Not all percentages total 100 due to rounding.
Flashy rewards are a big incentive to use credit cards, but Rossman believes people who take on debt to collect rewards aren’t using their cards wisely.
Chasing rewards while you’re in debt is a big mistake. It doesn’t make sense to pay 20 percent or more in interest just to earn 1, 2 or even 5 percent in cash back or airline miles.
— Ted Rossman, Bankrate Senior Credit Card Analyst
The bottom line
If you’re one of the millions of Americans carrying credit card debt from month to month, you may already know that paying it down can be an exhausting, uphill battle. While credit card debt is nothing to be ashamed of, it’s vital you make a plan to pay it off. Otherwise, high interest could cause your debt to spiral out of control.
Set aside a portion of your discretionary budget to pay more than the minimum on your credit card every month. If your budget is tight, you may need to get creative. Funnel any extra funds, like from a side hustle, work bonus or tax refund, towards credit card debt, and see where you can cut back in other categories in your budget. Any amount you can spare over your minimum will put you one step closer to paying off that debt for good.
Learn how to pay off your credit card debt
Not sure how to pay down your debt? This credit card debt payoff calculator can help you make a plan based on your budget and timeline.
You have different methods at your disposal to tackle your debt depending on what works best for you. If you have debt with very high interest rates (such as credit card debt), consider the debt snowball payoff method, where you pay your highest-interest debts first to avoid paying more in the long run. Or, if you need a motivational boost, you can pay your smallest debts first and work your way up to your largest debts, a method called the debt snowball.
Another strategy is a 0 percent balance transfer card, which allows you to move your balance to a new card with 0 percent interest for a limited time, often 12 to 21 months. You can use that time to aggressively pay down your principal without worrying about racking up additional interest.
No matter what strategy you choose, paying off debt is something to celebrate. Congratulate yourself on the win and know you’re one step closer to financial freedom.
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